RIYADH: The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, on Sunday agreed to extend most of its deep oil output cuts for 2024 but to start phasing them out in 2025
The decision seeks to shore up the market amid tepid global demand growth, high interest rates and rising US production.
According to the statement of the 37th OPEC and non-OPEC ministerial meeting, member states reaffirmed the framework of the Declaration of Cooperation, signed on Dec. 10, 2016, and further endorsed it in subsequent meetings, together with the Charter of Cooperation, signed on July 2, 2019.
Oil prices trade near $80 per barrel, below what many OPEC+ members need to balance their budget. Worries over slow demand growth in top oil importer China have weighed on prices alongside rising oil stocks in developed economies.
OPEC+ have made a series of deep output cuts since late 2022. The alliance’s members are currently cutting output by a total of 5.86 million barrels per day, or about 5.7 percent of global demand.
The meeting also the approval on the level of overall crude oil production for the DoC’s participating nations starting Jan. 1, 2025, until Dec. 31, 2025.
The cuts include 2 million bpd by all OPEC+ members, the first round of voluntary cuts by nine members of 1.66 million bpd, and the second round of voluntary cuts by eight members of 2.2 million bpd.
OPEC+ extended the first round of cuts until the end of 2025 from the end of 2024, the group said in a statement.
The countries which have made voluntary cuts in the second round are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the UAE and Gabon. The same countries except Gabon participated in the third round.
The group also agreed to allocate the UAE a higher production quota of 3.5 million bpd in 2025, up from the current level of 2.9 million.
OPEC+ also postponed the deadline for an independent assessment of its members’ production capacities to the end of November 2025 from June 2024. The figures will be used as guidance for 2026 reference production levels.
They also reiterated the mandate of the Joint Ministerial Monitoring Committee to closely review global oil market conditions, oil production levels, and the level of conformity with the DoC, assisted by the Joint Technical Committee and the OPEC Secretariat. The JMMC meeting is typically convened bimonthly.
This is besides approving to holding the ONOMM OPEC every six months, in accordance with the ordinary OPEC scheduled conference.
OPEC+ will hold its next meeting on Dec. 1, 2024.
