The Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, are currently cutting output by a total of 5.86 million barrels per day (bpd), which is about 5.7% of global demand.
Oil prices were little changed on Monday, as investors weighed a move by producer group OPEC+ to extend deep output cuts well into 2025.
Brent futures for August delivery were down 14 cents, or 0.2%, to US$80.97 a barrel at 0640 GMT, after falling to a session’s low of US$80.55. U.S. West Texas Intermediate (WTI) crude futures for July delivery slipped 9 cents, or 0.1%, to US$76.90, after falling to US$76.39 earlier.
Brent settled down 0.6% and WTI posted a 1% loss last week.
The Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, are currently cutting output by a total of 5.86 million barrels per day (bpd), which is about 5.7% of global demand.
This includes 3.66 million bpd of cuts that were due to expire at the end of 2024, and voluntary cuts by eight members of 2.2 million bpd to expire by the end of June 2024.
Analysts said investors will take time to do the math of the reduction in production and digest the decision.
“Overall, I think the decision is slightly bearish, as the market was not expecting OPEC+ to start unwinding the cuts in the fourth quarter,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“The communication of a surprisingly detailed default plan to unwind extra cuts makes it harder to maintain low production if the market turns out softer than bullish OPEC expectations,” the analysts said.
“The communication of a gradual unwind reflects a strong desire to bring back production of several members given high spare capacity.”
In the Middle East, Gaza conflict mediators urged Israel and Hamas to finalise a ceasefire and hostage release deal outlined by U.S. President Joe Biden, though Israel has said there will be no formal end to the war as long as Hamas retains power. Israel said it was assessing a governing alternative to the Iran-backed group.
An aide to Prime Minister Benjamin Netanyahu said Israel had accepted a framework deal for winding down the Gaza war, though the aide said it was flawed and in need of much more work.
