Explained | Why did OPEC+ members extend oil output cuts to mid-2024
Also Read: US sanctions threaten Russian oil sales to India; complicate process for OMCs to secure annual deals: Report Oil has found support in 2024 from rising geopolitical tensions and Houthi attacks on Red Sea shipping, although concern about economic growth has weighed. While OPEC+ was widely expected to keep the cuts in place, Russia's announcement could bolster prices further.
-Boost crude oil prices: The oil supply cuts first announced in 2023 as part of an agreement among oil producers to boost prices following economic uncertainty.
The plan to extend cuts to mid-2024 comes on top of previous cuts to both oil output and exports as some of the world's largest energy producers drive to push up market rates. -Support market stability: An energy ministry source told Saudi Press Agency (SPA) that Riyadh will extend its voluntary cut of one million bpd, which was implemented in July 2023, until the end of the second quarter of 2024. "Afterwards, in order to support market stability, these additional cut volumes will be returned gradually subject to market conditions,'' said the report.
Additionally, Russia's Deputy Prime Minister Alexander Novak also said, "In order to maintain market stability, these additional cuts will be gradually restored depending on market conditions," after the end of the second quarter. The extension was announced on the same day Russia said it would cut its production by almost half a million barrels in the second quarter of 2024. Saudi Arabia first announced its voluntary cut after the OPEC meeting in June 2023.
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