OPEC+ announced earlier this week that it will delay an increase in oil production, which was scheduled for October. This is a response to falling crude prices that fell to their lowest since early 2024.
OPEC+ is a coalition between the Organization of the Petroleum Exporting Countries (OPEC) and its allies and includes some of the biggest oil producers in the world, like Russia, Saudi Arabia, and the United Arab Emirates. The members of the coalition agreed to cut their production by 2.2 million barrels per day in October 2022, followed by voluntary cuts of 1.6 million barrels per day in April 2023 in order to prevent oversupply and send the prices further down.
The voluntary 1.6 million barrels per day cut was recently extended to 2025, while the 2.2 million barrels per day cut was supposed to end in September with a gradual production increase of 180,000 barrels per day.
However, OPEC+ has now announced it will prolong the latter for at least two months while expecting to completely phase out the cuts in November 2025.
“In recognition of this strengthened resolve and renewed firm commitment, the eight participating countries have agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024, after which these cuts will be gradually phased out on a monthly basis starting December 1st, 2024, according to the attached schedule, with the flexibility to pause or reverse the adjustments as necessary,” OPEC said in a statement.
Brent crude futures traded at $71.06 a barrel on Friday after coming down by 2.24% or $1.63, while U.S. West Texas Intermediate (WTI) crude futures traded at $67.67 per day after going down by 2.14%.