OPEC+ Extends Major Oil Output Cuts into 2025 Amid Market Challenges

Date:

Key Points:
– Extension of Output Cuts: OPEC+ extends most deep oil output cuts until 2025.
– Gradual Phase-Out: Slow phase-out of some cuts planned from October 2024.
– Market Concerns: Addressing tepid demand, high interest rates, and rising U.S. production.

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LONDON/DUBAI, June 2 (Reuters) – OPEC+ announced on Sunday the extension of the majority of its significant oil output cuts well into 2025. The decision aims to stabilize the market in the face of tepid demand growth, high interest rates, and increasing U.S. oil production.

Brent crude oil prices, hovering around $80 per barrel, remain below the budgetary needs of many OPEC+ members. Concerns over slow demand growth in China, the world’s top oil importer, and rising oil inventories in developed economies have further pressured prices.

Current and Extended Cuts:
– OPEC+ is currently implementing cuts totaling 5.86 million barrels per day (bpd), approximately 5.7% of global demand. This includes 3.66 million bpd of cuts initially set to expire at the end of 2024, and an additional 2.2 million bpd in voluntary cuts by eight members, expiring at the end of June 2024.
– The group agreed to extend the 3.66 million bpd cuts until the end of 2025 and prolong the 2.2 million bpd voluntary cuts by three months, now expiring at the end of September 2024.
– Starting in October 2024, OPEC+ will gradually phase out the 2.2 million bpd voluntary cuts over a year.

“We are waiting for interest rates to come down and a better trajectory when it comes to economic growth … not pockets of growth here and there,” stated Saudi Energy Minister Prince Abdulaziz bin Salman.

Future Projections:
– OPEC forecasts demand for OPEC+ crude to average 43.65 million bpd in the second half of 2024. If production remains at April’s rate of 41.02 million bpd, this implies a stocks drawdown of 2.63 million bpd. This drawdown will decrease as OPEC+ phases out the voluntary cuts starting in October.
– The International Energy Agency projects lower demand, estimating the need for OPEC+ oil plus stocks to average 41.9 million bpd in 2024.

Emman Tochi
Emman Tochihttps://naija247news.com
Emma Tochi is Naija247news Media Northern Bureau Chief, he's based in FCT Abuja. He overseas the northern operations of this business media

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