Oil prices fall amid OPEC+ agreement to extend output cuts
(MENAFN) On Monday, oil prices experienced a significant drop as investors assessed a complex agreement announced by the OPEC+ alliance, which involves extending oil production cuts predominantly until 2025. By 14:20 GMT, brent crude futures for August delivery had fallen below USD80 per barrel, marking a decline of over 2 percent. Similarly, U.S. West Texas Intermediate (WTI) crude futures for July delivery decreased by 2.3 percent, reaching USD75.21 per barrel.
Currently, the OPEC+ alliance, which comprises the Organization of the petroleum Exporting Countries (OPEC) and its allies led by Russia, maintains a production level of 5.86 million barrels per day. This output represents approximately 5.7 percent of global demand. On Sunday, the group agreed to prolong most of these production cuts into the next year, aiming to stabilize the market amidst several economic pressures. These pressures include weaker-than-expected demand growth, prolonged periods of interest rate hikes in major Western economies, concerns over slowing demand growth from China, and increasing oil production from non-OPEC countries.
The agreement specifically involves extending 3.66 million barrels per day of production cuts, originally set to end by late 2024, through to the end of 2025. Additionally, voluntary cuts by eight member states, totaling 2.2 million barrels per day and initially scheduled to conclude by the end of June this year, will now be extended for three months, lasting until the end of September 2024. This strategic move by OPEC+ highlights their efforts to manage supply in response to fluctuating global demand and to counterbalance rising output from outside the alliance.
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