OPEC+ Extends Oil Supply Cuts Through March
OPEC+ countries, including Saudi Arabia and Russia, have agreed to extend their oil supply cuts through March 2024, in a bid to stabilize global oil prices amid an oversupply of crude. The decision, which had been anticipated, comes after some internal disagreements caused a brief delay in the meeting, raising doubts about the cartel’s commitment to maintaining the cuts.
In a virtual meeting on Thursday, the Vienna-based group announced that eight OPEC+ nations would continue their voluntary adjustments, amounting to 2.2 million barrels per day (bpd), through March. After that, the cuts will be gradually phased out, with reductions expected on a monthly basis until the end of September 2026, depending on market conditions.
Without this new agreement, these eight countries—Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia, and the United Arab Emirates—had planned to start gradually increasing production in January, bringing it back to 2023 levels. However, these nations had previously postponed production hikes, first from October to December, and now through March.
The extended cuts are having only a muted impact on the market, as weak global demand continues to drag prices down. Analysts, including David Oxley from Capital Economics, noted that while the extension provides temporary relief, global oil demand remains weak, and the market could find itself in a similar position in a few months. “The fundamentals for oil prices remain weak,” Oxley said.
The International Energy Agency (IEA) projected that, even with the OPEC+ cuts in place, global oil supply will outstrip demand by over one million barrels per day in 2024.
Currently, OPEC+ is withholding six million barrels of oil per day, including the 2.2 million bpd under the new agreement. The group also decided to extend two other cuts for an additional year, until the end of 2026.
Before the meeting, analysts from DNB Bank had warned that there is no room for additional OPEC+ oil in 2025, and any increase in output could push down prices. This would be problematic for Saudi Arabia, which relies on high oil prices to fund its economic diversification efforts.
Despite the influence of Saudi Arabia and Russia in OPEC+, other member nations, such as Kazakhstan and the UAE, are eager to increase production, citing their spare capacity. Tensions within the group have also been exacerbated by countries like Iraq and Kazakhstan exceeding their quotas earlier in the year. In June, the UAE secured an additional 300,000 bpd quota for 2025, further fueling internal competition within the cartel.
