A general view of signs at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) on February 29, 2024 in Vienna, Austria.
Thomas Kronsteiner | Getty Images News | Getty Images
The influential Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, agreed on Sunday to extend their official cuts in crude oil production until 2025, and two other sets of supply restrictions were extended at different intervals.
The decision was in line with the expectations of analysts and OPEC+ delegates, who told CNBC before the meeting that the alliance was likely to extend its current cuts.
Under official policy, the alliance will produce a combined 39.725 million barrels per day next year, according to a schedule published by the OPEC secretariat. This figure represents the production levels required from individual members before any additional production adjustments are implemented and factors into the group's exit from Angola, a long-time OPEC member, earlier in January this year.
It also includes increasing UAE production by 300,000 barrels per day, in gradual stages, starting from January 2025 until the end of September next year.
In a statement translated by Google and reported by the state-owned Saudi Press Agency, a subgroup of the OPEC+ alliance, including Saudi Arabia and Russia, said it would extend a set of about 1.7 million barrels per day of voluntary cuts that were scheduled to continue. Expires at the end of this year. These cuts will now be implemented throughout 2025.
This smaller group of OPEC+ members will also extend another round of voluntary production cuts totaling 2.2 million barrels per day until the end of the third quarter of this year. These decorations were initially scheduled to last only until the end of the second quarter.
The statement added, “The quantities of this reduction, amounting to 2.2 million barrels per day, will then be restored gradually and on a monthly basis until the end of September 2025.”
A group of ministers representing countries implementing the voluntary cuts met in the Saudi capital Riyadh for talks on June 2, coinciding with broader technical meetings of OPEC, OPEC+ and the alliance on the same day. During a press conference on Sunday, Saudi Energy Minister Abdulaziz bin Salman stressed that this meeting was not the result of any tensions between members, but was held “to ensure that we interact with each other, to ensure that the messages are comprehensively understood and agreed upon.” on me.”
He noted that, unlike the current OPEC+ compliance and market study committees, this set of eight voluntary cuts “is not meant to be institutional.”
Demand is on the horizon
The group's attention shifted towards the balance of supply and demand amid the seasonal start of the summer driving season and the end of refinery maintenance in China, the largest importer of crude in the world. Institutions' views differ sharply, with OPEC's latest monthly oil market report for May forecasting an increase of 2.25 million barrels per day this year. Meanwhile, the oil market report issued by the Paris-based International Energy Agency last month indicates an increase in demand by only 1.06 million barrels per day.
Saudi Crown Prince Abdulaziz bin Salman, who heads the OPEC+ coalition, said on Sunday that there was “no rocket science” to the forecast, and acknowledged that while the OPEC report may offer a “higher assessment” on calling for crude oil, there are also “those who… They also have a very pessimistic view of demand.” He pointed out that the OPEC+ group deals with supply and demand considerations wisely and cautiously, saying of the possibility of imminent market tightness, “I will believe it when I see it.”
OPEC+ ministers will then meet to discuss policy steps on December 1.
