yolowire.com - The Organization of the Petroleum Exporting Countries and its allies (OPEC+) has agreed to extend its Oil output cuts into 2025.
In announcing an extension of the crude oil output cuts, OPEC+ said that it is trying to shore up the market amid soft global demand, high interest rates, and rising production in the U.S.
Brent crude oil, the international standard, is currently trading at $80 U.S. per barrel, which is below the price many OPEC+ countries need to balance their annual energy budgets.
Weak demand in China, the world’s biggest importer of oil, has weighed on crude prices in recent months alongside rising oil stocks in developed nations such as the U.S.
To help counter the current situation and firm prices, OPEC+ has made a series of output cuts since late 2022.
Currently, OPEC+ members are cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand.
The members of OPEC+ have now agreed to extend the production cut until the end of 2025.
In a revised outlook, OPEC+ said that it expects demand for crude oil to average 43.65 million bpd in the second half of this year.
The International Energy Agency (IEA) has estimated that demand for OPEC+ oil stocks will average much lower levels of 41.9 million bpd throughout the remainder of this year.
Analysts had expected OPEC+ to prolong its voluntary cuts by a few months due to falling oil prices and sluggish demand. The move to extend the production cuts by a year was a surprise.
Despite the surprise decision, crude prices are little changed today (June 3). Brent crude oil is currently trading at $80.68 U.S. a barrel, down 0.54% in the last 24 hours.
West Texas Intermediate (WTI) crude oil, the American benchmark, is trading at $76.53 U.S. per barrel, down 0.58% in the past day.
OPEC+ is scheduled to hold its next meeting on December 1 of this year.