In a significant move to stabilize global oil markets, the OPEC+ alliance, which includes influential oil-producing nations such as Saudi Arabia and Russia, has unanimously agreed to maintain oil production cuts until the end of 2025. The alliance’s decision is a response to the slow growth in global demand, particularly from China, and the aim to keep oil prices around the current level of $80 per barrel despite economic and geopolitical uncertainties including the ongoing war in Ukraine and tensions in the Middle East which have previously led to fluctuations in price expectations and concerns over supply disruptions as well as the challenge of balancing market supply without causing a price drop. The total production cut agreed upon by OPEC+ stands at 5.86 million barrels per day, which is approximately 5.7% of the global oil demand. The alliance has outlined a phased withdrawal of these cuts starting in 2025, with a gradual monthly reduction of the additional voluntary cuts of 2.2 million barrels per day until they reach zero by the end of September 2025. Notably, the United Arab Emirates has negotiated an increase in its production quota by 300,000 barrels per day starting from January 2025, which will be implemented gradually until the end of September 2025. This adjustment allows the UAE to maintain its production cuts while simultaneously increasing its volumes. The OPEC+ alliance’s strategy reflects a careful approach to managing the delicate balance between supply and demand in the oil market. The group will continue to monitor market conditions closely and adjust their strategies accordingly, with the Joint Ministerial Monitoring Committee meeting bi-monthly to ensure compliance and address any market changes. The decision has been met with a broad consensus among the member countries, demonstrating their commitment to market stability.
Key points
- OPEC+ has extended oil production cuts to the end of 2025 to stabilize the market and sustain prices around $80 per barrel.
- The total production cut by OPEC+ is 5.86 million barrels per day, around 5.7% of global demand.
- The UAE has secured a quota increase of 300,000 barrels per day starting from January 2025.
- The alliance will phase out cuts starting in 2025, with a monthly reduction of voluntary cuts until September 2025.
