Vienna, Austria – June 3, 2024 – The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, have agreed to extend their voluntary production cuts by 2.2 million barrels per day (mb/d) until the end of September 2024, according to a statement released by the group. The cuts will then be phased out gradually over the following year, with a total of 2.5 mb/d of production expected to return to the market by the end of September 2025.
The decision was made at the 37th OPEC+ ministerial conference, held in Vienna on Sunday. It comes as the group seeks to balance the global oil market amid concerns about a potential slowdown in demand.
In addition to extending the voluntary cuts, OPEC+ also agreed to increase the production quota for the United Arab Emirates by 300,000 mb/d. This will bring the group’s overall production target to 39.72 mb/d for the 19 countries that are subject to quotas. The three remaining OPEC+ members – Venezuela, Iran, and Libya – are exempt from quotas due to various production issues.
The voluntary cuts were originally implemented in November 2023 and were due to expire at the end of June 2024. The decision to extend the cuts reflects the group’s continued commitment to market stability.
Additional details
The voluntary cuts are being implemented by eight OPEC+ members: Saudi Arabia, Russia, Iraq, Kazakhstan, the United Arab Emirates, Kuwait, Oman, and Algeria.
The cuts are intended to offset production increases from other sources, such as the United States.
OPEC+ has a history of using production cuts to support oil prices. The group’s actions have been effective in the past, but they have also been criticized for reducing competition and limiting consumer choice.
"Impact on the oil market" -> The extension of the voluntary cuts is likely to support oil prices in the near term.
- However, the gradual phase-out of the cuts could put downward pressure on prices in the longer term.
- The overall impact of the decision will depend on a number of factors, including global economic growth and the level of oil production from non-OPEC+ countries.
Source: Jornal de Angola
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