Oil prices rise as OPEC+ prolongs production cuts till 2025
(MENAFN) Oil prices rebounded, erasing earlier losses on Monday, following the OPEC+ alliance's decision to prolong significant oil production cuts through 2025. This price action saw brent crude futures for August delivery rise by 29 cents, or 0.3 percent, reaching USD81.16 a barrel at 0313 GMT. Similarly, US West Texas Intermediate crude futures for July delivery increased by 31 cents, or 0.4 percent, to USD77.30.
The OPEC+ alliance, which comprises the Organization of the petroleum Exporting Countries and allies led by Russia, is currently implementing a reduction of 5.86 million barrels per day, accounting for approximately 5.7 percent of global oil demand. Initially, this reduction included 3.66 million barrels per day set to conclude by the end of 2024, along with an additional 2.2 million barrels per day from eight member states slated to expire by the end of June this year. However, on Sunday, the coalition agreed to extend the 3.66 million barrels per day cut for another year, until the end of 2025, and to prolong the voluntary 2.2 million barrels per day reduction for three more months, until the end of September 2024.
The plan outlines a gradual rollback of the voluntary 2.2 million barrels per day cut starting from October 2024, tapering off by September 2025. Analysts had anticipated a short-term extension of the voluntary cuts due to declining oil prices and slowing demand. Nonetheless, many analysts also predicted that OPEC+ would encounter challenges in setting production targets for 2025, as the alliance has not yet finalized production capacity targets for each member country, a point of contention that has previously created friction within the group.
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