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Oil producer group OPEC+ has agreed to extend most of its output curbs until next year in a bid to bolster crude prices.
After a ministerial meeting in Riyadh on Sunday, the OPEC cartel and allies including Russia decided to extend the 2 million bpd cut until the end of 2025 instead of ending it at the end of 2024.
In a statement, OPEC said the group agreed to “extend the level of total crude oil production for OPEC and non-OPEC countries from January 1, 2025 to December 31, 2025.”
A group of OPEC+ members agreed to extend other, voluntary cuts that were also aimed at supporting oil prices amid subdued global demand.
Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman gathered on the sidelines of the Riyadh meeting and pledged to extend their additional voluntary cuts of 1.65 million barrels per day until the end of December 2025.
The second set of further voluntary cuts totaling 2.2 million barrels per day, announced in November 2023, will now be extended until the end of September 2024 – and then phased out next year.
The cuts are intended to “support the stability and balance of oil markets,” the Saudi Energy Ministry said in a statement.
OPEC also agreed a new production target for the United Arab Emirates – they will be allowed to gradually increase production by 300,000 barrels per day from the current level of 2.9 million barrels per day.
The price of Brent crude oil weakened last month, falling from nearly $88/barrel in late April to $81.62/barrel in late May.
The OPEC+ meeting came as Saudi Arabia, OPEC’s biggest oil producer, began selling 1.545 million shares in its Saudi Aramco producer, or about 0.64% of the issued shares, which could raise $12 billion.
This secondary share sale comes five years after Aramco went public, in the world’s largest initial public offering to date. It continues until Thursday and saw strong interest from investors on Sunday, when demand already exceeded the amount of shares on offer.
Bill Blaine, the market strategist at Wind Shift Capital, explained that Saudi Arabia is using the wealth of its oil reserves to innovate and diversify its economy.
“Although some of the projects at the heart of Saudi Arabia’s reinvention have already been scaled back due to escalating costs and the purchase of global sports franchises is generally misunderstood, the plan is to fuel the economy with abundant investment from the state’s SWF, the Public Investment Fund,” it added Blaine.
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