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OPEC+ agrees to extend oil production cuts

OPEC+ agrees to extend oil production cuts

OPEC+ has announced the extension of significant oil production cuts through 2025 as the group aims to stabilize the market amid modest demand growth, high interest rates, and increased production from U.S. competitors.

The decision, made on Sunday, June 2, represents a strategic move to sustain oil prices, which are trading around $80 per barrel—substantially below the budgetary needs of many OPEC+ member countries. This strategy is intended to provide a more predictable supply landscape, offering markets some certainty amid fears of demand fluctuations and geopolitical tensions.

Since late 2022, the Organization of Petroleum Exporting Countries and its allies have implemented a series of deep production cuts. Currently, OPEC+ is reducing output by a total of 5.86 million barrels per day, which accounts for about 5.7% of global demand. This includes cuts of 3.66 million barrels per day set to expire at the end of 2024, and voluntary reductions by eight members totaling 2.2 million barrels per day until the end of June 2024.

OPEC+ has resolved to extend the 3.66 million barrels per day cut for an additional year until the end of 2025 and to continue the voluntary reduction of 2.2 million barrels per day for three more months until the end of September 2024. The group plans to gradually phase out these voluntary cuts.

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