On Monday, eight OPEC+ nations announced that they would extend the reduction in oil production until the end of next December.
“Agreed to extend for one month the additional voluntary production cut of 2.2 million barrels per day,” the states—Iraq, Russia, Saudi Arabia, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and the Sultanate of Oman—stated in a statement.
The choice means to keep the market from being overflowed with supply and costs from falling, while the cost of US West Texas Moderate rough and Brent unrefined is around $70 per barrel in the midst of no development popular and a speed increase in supply.
To address the difficulties posed by US competition, OPEC, led by Saudi Arabia, formed the OPEC+ alliance in 2016 with other nations, including Russia.
Twenty-two members of this alliance are reducing production by approximately six million barrels per day, either through additional voluntary restrictions or a decision made at the alliance level.
Beginning in December, OPEC+ ministers are scheduled to meet in Vienna, where OPEC is headquartered. However, the announcement made on Sunday reaffirms that the eight nations that extended production cuts will not reverse them before the beginning of 2025.
As a result, voluntary reductions will begin at least three months later than planned at the most recent ministerial meeting, which took place in early June. At that meeting, OPEC and its allies announced that they wanted to increase production beginning in October.
However, the group noted at the time that this decision could be reevaluated at any time.
Due to a slowdown in the economy in China, the world’s second-largest consumer and the primary driver of global oil demand growth, as well as in the United States, which is waiting for the results of the Tuesday presidential elections, global oil demand growth has been declining for months.
