OPEC+ Agrees to Extend Oil Output Cuts Amidst Market Challenges
In a move to address challenges in the oil market, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have agreed to extend most of their deep oil output cuts for 2024 but to begin phasing them out in 2025.
The decision comes as global demand growth remains tepid, interest rates are high, and US production continues to rise.
During the 37th OPEC and non-OPEC ministerial meeting, member states reaffirmed their commitment to the Declaration of Cooperation signed in 2016 and the Charter of Cooperation signed in 2019.
Oil prices currently hover around $80 per barrel, below the level needed by many OPEC+ members to balance their budgets. Concerns over slow demand growth in China and increasing oil stocks in developed economies have put pressure on prices.
Since late 2022, OPEC+ has implemented significant output cuts, reducing production by a total of 5.86 million barrels per day, equivalent to about 5.7 percent of global demand.
The meeting also approved the overall crude oil production levels for participating nations under the Declaration of Cooperation from Jan. 1, 2025, to Dec. 31, 2025.
These cuts include 2 million bpd from all OPEC+ members, a first round of voluntary cuts by nine members totaling 1.66 million bpd, and a second round of voluntary cuts by eight members totaling 2.2 million bpd.
OPEC+ has extended the first round of cuts until the end of 2025, as per the group’s statement.
Countries participating in the second round of voluntary cuts include Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia, the UAE, and Gabon. The same countries, excluding Gabon, took part in the third round.
Furthermore, the UAE has been allocated a higher production quota of 3.5 million bpd in 2025, up from the current level of 2.9 million.
OPEC+ has also postponed the deadline for an independent assessment of its members’ production capacities to the end of November 2025, which will be used as guidance for 2026 reference production levels.
The group has reiterated the importance of the Joint Ministerial Monitoring Committee in monitoring global oil market conditions, production levels, and adherence to the Declaration of Cooperation, with support from the Joint Technical Committee and the OPEC Secretariat. The JMMC typically meets every two months.
In addition, OPEC+ has approved the ONOMM OPEC to be held every six months, aligning with the regular OPEC conference schedule. The next meeting is scheduled for Dec. 1, 2024.