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OPEC+ Extends Deep Oil Production Cuts into 2025

On Sunday, OPEC+ announced the extension of its significant oil output cuts well into 2025, aiming to stabilize the market amid lukewarm demand growth, high interest rates, and increasing U.S. oil production.


Oil Price and Market Dynamics

Brent crude oil prices have recently hovered around $80 per barrel, below the levels many OPEC+ members require to balance their budgets. Concerns about slow demand growth from China, the world’s top oil importer, and rising oil inventories in developed economies have further pressured prices.


Current Output Cuts

Since late 2022, the Organization of the Petroleum Exporting Countries and allies led by Russia, collectively known as OPEC+, have implemented a series of deep output cuts. The current reduction totals 5.86 million barrels per day (bpd), approximately 5.7% of global demand. This includes 3.66 million bpd of cuts due to expire at the end of 2024 and voluntary cuts by eight members amounting to 2.2 million bpd, set to end in June 2024.


Extended and Phased Cuts

OPEC+ agreed to extend the 3.66 million bpd cuts by a year until the end of 2025 and to prolong the 2.2 million bpd voluntary cuts by three months until the end of September 2024. Starting in October 2024, OPEC+ will gradually phase out the 2.2 million bpd cuts over the course of a year.

Market Reactions and Future Prospects

Saudi Energy Minister Prince Abdulaziz bin Salman emphasized the need for lower interest rates and more consistent economic growth before ending the cuts. OPEC anticipates that demand for OPEC+ crude will average 43.65 million bpd in the second half of 2024, implying a stock drawdown of 2.63 million bpd if the group maintains its April output rate of 41.02 million bpd. This drawdown will decrease as the voluntary cuts phase out starting in October.

The International Energy Agency, representing major global consumers, estimates a lower demand for OPEC+ oil, averaging 41.9 million bpd in 2024. Amrita Sen, co-founder of the Energy Aspects think tank, noted that the deal should ease market fears of OPEC+ increasing output amidst ongoing demand concerns.

Strategic Planning and Negotiations

Contrary to some analysts’ expectations, who predicted a challenging negotiation process over individual capacity targets, OPEC+ managed a swift agreement. The UAE, which has been advocating for a higher production quota, will be allowed to gradually increase its output by 0.3 million bpd from the current level of 2.9 million.

Discussions on capacity targets were postponed until November 2025. This delay is partly due to difficulties in assessing Russian data amid Western sanctions.


Sunday’s meetings, lasting less than four hours, reflected extensive behind-the-scenes preparation by key ministers, particularly Prince Abdulaziz. The decision to extend the cuts and postpone difficult capacity discussions represents a significant show of solidarity within OPEC+.

Next Meeting

OPEC+ will convene its next meeting on December 1, 2024.

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