Opec+ crude oil suppliers refrain from increasing output.
Economic turmoil, fewer diesel cars, and a mild winter are causing issues for OPEC. But major oil-producing countries are responding by extracting less "black gold" from the earth. This move is aimed at maintaining stable prices. Demand is expected to bounce back soon.
Eight oil-exporting members of OPEC+, including Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, plan to keep their production cuts going beyond their original plan. This decision was announced by the Saudi Energy Ministry. These countries intend to voluntarily reduce their production quotas by 2.2 million barrels (159 liters) per day until September 2024. Saudi Arabia will be the only exception, as it plans to gradually increase its production from January to September 2025. This increase will allow the country to produce 3.5 million barrels per day in 2025. The UAE's production quota will rise by 300,000 barrels per day, bringing the total production quota to 39.7 million barrels per day.
Russia and other countries have agreed to continue their voluntary cuts of 1.66 million barrels per day, which have been in place since April 2023, for the entire year 2025. The IEA forecasts global demand for oil could be lower than expected due to a struggling industrial economy and a mild winter. This has especially impacted Europe, where the decreasing share of diesel vehicles will also reduce consumption. The agency projects a rise in demand for the remainder of the year.
OPEC+ has been cutting oil production multiple times since the end of 2022. These voluntary cuts currently amount to 5.86 million barrels per day. However, observers believe more oil may be entering the market than officially reported, and the OPEC+ member states have recently increased their production quotas. This could threaten the organization's supply strategy.
Oil prices have been dropping since September 2023 due to weak global demand. A reduction in production by some countries led to a short-lived recovery. Crude oil prices have hovered around the $80 per barrel mark since November of the previous year.
Since 2017, OPEC, led by Saudi Arabia, has been collaborating with other producers under Russian leadership to manage the global supply and hence, prices. Together, they form OPEC+. Of the 102 million barrels of oil produced worldwide in the first quarter of this year, approximately 40% came from OPEC+.
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The United Arab Emirates, along with other OPEC+ members, has agreed to increase its production quota, contributing to the overall OPEC+ production of over 100 million barrels per day.
Despite Russia's continued voluntary cuts of 1.66 million barrels per day, the global demand for oil is forecasted to be lower than expected due to various factors, including a struggling industrial economy and fewer diesel cars.
Russia and Saudi Arabia, leading members of OPEC+, have been collaborating since 2017 to manage the global supply of oil and maintain stable prices, using raw material oil as the primary resource.
