OPEC+ has announced an extension of its substantial oil production cuts into 2025, aiming to stabilize the market amid sluggish demand growth, elevated interest rates, and increasing U.S. oil production. The group will maintain its current reduction of 5.86 million barrels per day (bpd), with specific cuts being extended and gradually phased out.

The decision to prolong significant production cuts underscores OPEC+'s commitment to market stabilization. Faced with slow demand growth, high interest rates, and the rise in U.S. oil production, the group aims to support oil prices by managing supply tightly. OPEC+ is currently implementing cuts amounting to 5.86 million bpd, representing approximately 5.7 percent of global demand. This figure includes mandatory reductions of 3.66 million bpd, originally set to expire at the end of 2024, and voluntary cuts by eight members totaling 2.2 million bpd, which were initially scheduled to end in June 2024.

The mandatory cuts of 3.66 million bpd will now be extended until the end of 2025. Meanwhile, the voluntary cuts of 2.2 million bpd will be extended by three months, up to the end of September 2024. Following this period, these voluntary reductions will be gradually phased out over the year, from October 2024 to September 2025.

Saudi Energy Minister Prince Abdulaziz bin Salman emphasized that the group's strategy is to wait for more favorable economic conditions before altering their production approach. Specifically, OPEC+ is looking for lower interest rates and more consistent global economic growth rather than isolated growth spurts to ensure a stable market environment.