Energetic resource - Opec+ extends oil production cuts
The OPEC+ alliance of oil-producing countries maintains a tight production policy. Since November 2022, they've been cutting oil production by 2 million barrels (159 liters) per day, and this is likely to continue until the end of 2025, apart from a minor increase for the United Arab Emirates, as revealed following discussions.
The estimated overall production level stands at 39.7 million barrels (159 liters) per day. Notable producers in the group are Saudi Arabia and Russia, but the largest oil producer, the United States, is not part of OPEC+. The intention behind these measures is to prop up oil prices.
Among the 20 OPEC+ nations, 8 of them have opted to extend their 1.65 million barrels per day voluntary production cut reached in April 2023 until the end of the following year. Russia and Saudi Arabia are part of this group. Additionally, the 2.2 million barrels per day cut that started in November 2023 will be maintained until September 2025, after which it will be lifted gradually month by month.
Analysts had anticipated this outcome. According to the International Energy Agency (IEA), global oil demand has not been progressing as strongly as expected previously. The slowing industrial sector and a moderate winter have constrained oil consumption, particularly in Europe, where the decrease in diesel vehicles' market share will further reduce consumption. However, the IEA anticipates an increase in demand later this year.
OPEC, a Saudi Arabia-led organization of oil-exporting nations in Vienna, has been collaborating with other producing countries under Russian leadership since 2017 to regulate global supply and influence prices. They're collectively known as OPEC+. In the first quarter of 2023, around 40% of the 102 million barrels of daily produced oil worldwide came from OPEC+.
The negotiation occurred in Riyadh. Some participants joined the discussion online.
