OPEC+ extended cuts but plans to boost again in the fall

investmentnews.com:

OPEC+ extended its production cuts as it seeks to bolster a fragile market, but also set a date to begin bringing some oil back online later this year.

The agreement reached in Riyadh on Sunday exceeds market expectations in some ways, extending so-called “voluntary” cuts from key members including Saudi Arabia and Russia well into next year. However, it also begins rolling back those supply reductions in October, earlier than some OPEC-watchers had assumed.

Oil prices reflected these tensions on Monday, with crude swinging between gains and losses just above $80 a barrel in London. 

The deal suggests group leader Saudi Arabia, which hosted ministers in its capital after initial plans for a gathering at the OPEC headquarters in Vienna were canceled, is attempting to strike a balance between competing interests. The agreement aims to keep supporting crude prices while also easing the production restraints against which some members, such as the United Arab Emirates, have chafed. 

“We will maintain our precautious and preemptive approach,” Saudi Energy Minister Prince Abdulaziz bin Salman told reporters after the meeting. That includes the possibility of pausing or even reversing the phase-out of the cuts, he said. 

Prior to the meeting, traders and analysts had widely expected OPEC+ to prolong its voluntary supply reductions in order to offset soaring output from its rivals, with some predicting they would be maintained until the end of 2024. Under the new agreement, the eight nations participating in these additional curbs will have added about 750,000 barrels a day to the market by January.

The accord prolongs roughly 2 million barrels a day of cuts, which have played a key role in supporting crude prices above $80 a