Oil Prices Hold Steady as OPEC+ Extends Output Cuts
In a move that surprised the market, producer group OPEC+ decided to extend deep output cuts well into 2025, causing oil prices to remain largely unchanged on Monday.
Market Reaction
Brent futures for August delivery dipped slightly to $80.97 a barrel, while US West Texas Intermediate crude futures for July delivery slipped to $76.90. Both benchmarks posted losses last week, with Brent down 0.6 percent and WTI down 1 percent.
OPEC+ Decision
OPEC+ is currently cutting output by a total of 5.86 million barrels per day, representing about 5.7 percent of global demand. The group agreed to extend cuts of 3.66 million bpd until the end of 2025, in addition to prolonging voluntary cuts of 2.2 million bpd until September 2024.
Analysts’ Views
Analysts believe that the market will need time to assess the impact of the production cuts and the decision to extend them. Some experts view the move as slightly bearish, as it was unexpected for OPEC+ to start unwinding cuts in the fourth quarter.
Middle East Developments
In the Middle East, mediators are urging Israel and Hamas to finalize a ceasefire and hostage release deal outlined by US President Joe Biden. Israel is considering alternative governing options to address the conflict with the Iran-backed Hamas group. Prime Minister Benjamin Netanyahu’s aide stated that Israel has accepted a framework deal for winding down the Gaza war, but believes it needs further refinement.