(MENAFN- The Peninsula) AFP
Vienna: The OPEC+ group of oil-producing nations agreed Sunday to extend their production cuts until the end of 2025 in a bid to support prices amid economic and geopolitical uncertainty.
The 12-member oil group and its 10 allies decided to "extend the level of overall crude oil production... starting 1 January 2025 until 31 December 2025," a statement by the alliance said.
The group-wide supply cuts amount to about two million barrels per day (bpd).
The decision came shortly after the biannual meeting of the Organization of the petroleum Exporting Countries (OPEC), led by Saudi Arabia, and its 10 partners, headed by Russia, began in a hybrid format at around 1200 GMT.
Since late 2022, the alliance has implemented a series of supply cuts in a bid to bolster flagging oil prices.
OPEC+ members are currently slashing output by almost six million barrels per day, both via group-wide production cuts and additional voluntary curbs.
In addition to extending the production cuts, OPEC+ also agreed to allow the United Arab Emirates to increase its production by 300,000 bpd for next year, a statement said.
The UAE is one of the countries that agreed to further curtail production at the request of Saudi Arabia, which had asked to share the burden of supply cuts in an effort to support prices.
'Challenging environment'
Heavyweights Saudi Arabia and Russia as well as Algeria, Oman, Kazakhstan, Kuwait and Iraq have also made voluntary supply cuts this year, which might be renewed in 2025, according to an OPEC+ table posted online.
No detailed figures were given.
But according to Mukesh Sahdev at the Rystad Energy research group, the alliance faces the issue of "actual barrels flowing to the market likely being higher than what is accounted for", which could potentially undermine the group's strategy.
Moreover, Iraq and Kazakhstan exceeded their quotas in the first quarter, while Russia overproduced in April.
Oil prices have changed little since the last meeting in November, hovering at around $80 a barrel.
Amid questions surrounding global demand, some analysts say that gradually allowing more oil to hit markets might be ahead in 2025.
OPEC continues to stick to its demand forecasts for 2024, while the International Energy Agency has revised its estimates downwards.
Amid "above-average inflation, slowing global growth outlook, central bank uncertainties, rising US oil production and Middle East tensions, the environment is challenging", said Ipek Ozkardeskaya, a market analyst at Swissquote Bank.
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