Jakarta – The Organization of Petroleum Exporting Countries and its allies, or OPEC+, has agreed to delay the planned increase in oil production through formal and voluntary production cuts until 2026. This delay comes amid declining global oil demand.
As quoted from CNBC on Friday (December 6, 2024), eight member countries of the oil-exporting group agreed to extend the production cut of 2.2 million barrels per day until the first quarter of 2025 and will gradually increase oil production starting in April or September 2026.
Several OPEC+ members will also postpone the cessation of voluntary cuts of 1.7 million barrels per day until the end of next year. These production cuts were originally scheduled to last only until 2025.
OPEC+ consists of 13 member countries, including Algeria, Angola, Saudi Arabia, Gabon, Equatorial Guinea, Iran, Iraq, Congo, Kuwait, Libya, Nigeria, the United Arab Emirates, and Venezuela.
Based on its formal production strategy, the broader OPEC+ coalition will now limit its combined output to 39.725 million barrels per day (bpd) until December 31, 2026. Previously, this production quota was only set for 2025.
Despite the production cuts and the conflicts threatening the Middle East, global oil prices remained low for most of this year, under pressure from the weak demand outlook. Additionally, U.S. President-elect Donald Trump plans to make the U.S. the largest oil producer in the world.
“Although OPEC+’s decision today to delay part of its production cuts until April 2025 gives the group time, weak global oil demand may easily push the group back into the same position in three months,” said analysts at Capital Economics in a note.
