Mubasher: The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, collectively referred to as OPEC+, have agreed to extend significant oil production cuts into 2025, according to Reuters.
OPEC+ has decided to prolong the production cuts of 3.66 million barrels per day (bpd) by an additional year, now lasting until the end of 2025.
Additionally, the cuts of 2.20 million bpd will be extended by three months, up to the end of September 2024.
Starting in October 2024, OPEC+ will gradually reduce the 2.20 million bpd cuts over the course of a year, concluding in September 2025.
OPEC anticipates that demand for OPEC+ crude will average 43.65 million bpd in the second half (H2) of 2024. If the group maintains the April output level of 41.02 million bpd, this would result in a stock drawdown of 2.63 million bpd.
However, this drawdown will decrease when OPEC+ begins to phase out the 2.20 million bpd voluntary cuts in October.
Since late 2022, OPEC+ has implemented a series of substantial output cuts. Currently, OPEC+ members are reducing output by a total of 5.86 million bpd, which is about 5.70% of global demand.
This includes 3.66 million bpd of cuts, initially set to expire at the end of 2024, and additional voluntary cuts by eight members amounting to 2.20 million bpd, due to expire at the end of June 2024.
