Eight OPEC+ oil-producing nations, led by Saudi Arabia and Russia, announced on Sunday an extension of supply cuts until the end of December. The move, impacting 2.2 million barrels per day, is aimed at supporting oil prices amid unpredictable demand and heightened global supply, especially in light of the upcoming U.S. presidential election.
The Organization of the Petroleum Exporting Countries (OPEC), based in Vienna, confirmed the decision, stating that Algeria, Iraq, Kazakhstan, Kuwait, Oman, and the United Arab Emirates would join Saudi Arabia and Russia in maintaining the cuts initially set in November 2023. The collective move underscores concerns over recent sluggish demand, which has kept prices in check.
Analysts, however, anticipate only a limited impact from the extension. Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, called the decision a “logical step” amid downward pressure on prices due to weak demand from China and ample non-OPEC supply. But she warned that any price increase could be short-lived without more substantial production restrictions from OPEC+. She added that OPEC+ currently represents less than half of global oil output, which limits its leverage.
The timing of the cut extension aligns with the upcoming U.S. presidential election, which could influence global markets. Jorge Leon, an analyst at Rystad Energy, highlighted that a potential victory for former President Donald Trump could trigger a trade war, likely reducing demand further.
OPEC+ ministers are scheduled to convene again in early December at the group’s Vienna headquarters. However, Sunday’s announcement suggests that any increase in production is unlikely until early 2025, despite prior discussions on potentially boosting output.