Oil rates drop to 4-month lows amid OPEC+ output cut plans
(MENAFN) On Tuesday, global oil markets witnessed a significant downturn, with prices hitting their lowest in four months. This decline followed an announcement by OPEC+ outlining intentions to gradually phase out output cuts until September 2025. The international benchmark, brent crude, traded at USD77.39 per barrel, representing a 1.24 percent drop from the previous session's close, while the American benchmark, West Texas Intermediate (WTI), fell to USD73.07 per barrel, marking a 1.54 percent decrease.
OPEC and its allies, collectively known as OPEC+, disclosed on Sunday their decision to extend additional voluntary cuts of 2.2 million barrels per day (bpd) until the end of September 2024. However, they also revealed plans to gradually diminish these cuts on a monthly basis until September 2025. Additionally, the group announced a phased increase of 300,000 bpd in production in the United Arab Emirates (UAE) from January 2025 to September 2025.
While the output cut decision initially alleviated supply concerns, it ultimately exerted downward pressure on oil prices. The prospect of increased production in the UAE contributed to market uncertainties, despite the broader agreement within OPEC+.
Meanwhile, hopes for a ceasefire in Gaza offered some relief to supply anxieties. With the Middle East being home to the majority of global oil reserves, the potential for reduced geopolitical tensions in the region served to assuage concerns about oil supply disruptions.
The announcement by US President Joe Biden regarding Israel's willingness to pursue a ceasefire proposal further bolstered optimism. Biden confirmed during a call with Qatari Emir Tamim bin Hamad al-Thani that Israel was prepared to advance negotiations with Hamas, fostering a sense of progress in resolving the conflict in Gaza.
As global oil markets navigate the complexities of production agreements and geopolitical dynamics, investors and analysts remain vigilant for further developments that could shape future price trends.
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