US, June 22, 2024
OPEC, the organization of petroleum exporting countries and other partners, known as OPEC, has agreed to prolong the stringent oil production curtailment up to 2025.
Given the slow demand, high interest rates, and increasing compatriot US production, this decision emerges when the group wants to support the market.
The cuts include 3. 660000, which were initially agreed to be made until the end of 2024, and 280000 which eight members decided to make on their own volition. 2 million with a term that lasts until the end of June 2024.
These total output cuts equal 5. Eighty-six million or 5% more than the current production level of 75. 7% of global demand.
The decision to extend the cuts was approved during the OPEC and non-OPEC ministerial monitoring committee meeting in Vienna on June 19, 2018.
To the group’s surprise, they approved the cuts of 3. The plan is to reduce global production to 66 million by a year until the end of 2025 and extend the cuts by 2.
Two million by three months up to the end of the third quarter of the financial year ending September 2024. OPEC will gradually want to get rid of the cuts of 2.
Oil exports are expected to be 2 million in one year, from October to September the following year, starting October 2024.
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It is a measure to curb the problem that has persisted for some time now: increasing oil stocks and slow demand. The IEA has down–adjusted its estimate of the increase in demand for oil this year by 140,000 barrels per day to 1.
One million barrels of oil per day and linked this decrease to low demand from developed countries, especially Europe. Still, one should remember that an actual supply shortage may be formed in the face of a weaker demand forecast.
Despite the expectations of the IEA, the global supply is expected to rise by only 580,000 barrels per day this year. It is made with oil prices at $80 per barrel or less, which is still insufficient for members’ budgets.
Sluggish demand in China and increased crude stock pile-up in developed countries have been factors that have led to the downward pressures.
The effectiveness of the cuts will be assessed at the next OPEC meeting, which will be held on December 1, 2024, and the 2026 goals will be agreeable during this meeting.
