OPEC+ extends crude oil production cuts to the end of the year

Several OPEC+ members, including Saudi Arabia and Russia, have announced the extension of oil production cuts until the end of December, thus postponing the reopening of the taps in the face of the collapse in prices. Eight countries “agreed to extend their additional voluntary production cuts by one month by 2.2 million barrels per day,” the alliance said in a statement. Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman are also involved.

This decision is destined to support prices, with US crude oil WTI and Brent hovering around $70 in the face of uncertain demand and accelerating supply. In 2016, members of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and their allies led by Moscow, signed an agreement called OPEC+ to increase their influence on the market.

The 22-member alliance currently keeps nearly six million barrels underground through three different mechanisms, both at the group level and in the form of voluntary cuts. All ministers will meet at the beginning of December in Vienna, headquarters of OPEC, but with Sunday’s announcement, the eight countries making these voluntary cuts have already decided not to reopen the black gold taps until the beginning of 2025.

This is a delay of at least three months compared to what was initially expected: at the last ministerial meeting in early June, OPEC and its allies had announced their intention to increase production starting from October. However, the alliance was careful to leave itself a way out, insisting on multiple occasions that this decision could be revisited at any time.

For several months, oil prices have been undermined by economic uncertainties, in particular in China, the world’s second largest consumer and main driver of growth in global oil demand, and in the United States, where the results of the American elections scheduled for 5 November.