Opec+ producers extend voluntary cuts as oil prices struggle

Opec+ members have agreed to prolong their voluntary production cuts, extending them by another two months in a bid to stabilize the oil market. These cuts, totaling 2.2 million barrels per day, will remain in place until the end of November 2024. The decision was announced following a virtual meeting held by key oil-producing countries, including Saudi Arabia, Russia, Iraq, and the UAE. The agreement also outlines that these reductions will be gradually phased out from December 2024, with adjustments set to continue through November 2025, allowing flexibility to reverse or halt the cuts if required.

This extension of voluntary cuts follows similar measures implemented in April and November 2023, which were intended to curb the supply glut amid decreasing crude oil prices. Despite these efforts, oil prices have struggled, weighed down by concerns over slowing demand from China and increasing production in the United States, the world's largest producer. As of September 2024, these cuts represent a calculated move by Opec+ to counteract the oversupply while supporting global oil prices, which have been under significant pressure throughout the year.

Saudi Arabia and Russia have been at the forefront of these efforts, reducing their output by 1 million barrels per day and 500,000 barrels per day, respectively. However, the oversupply situation has been exacerbated by Iraq and Kazakhstan, which have been overproducing since early 2024. Both nations have now committed to compensating for the excess production by September 2025, reaffirming their alignment with the broader Opec+ strategy to balance the market.