OPEC+ to extend oil production cuts until end of 2024

According to industry sources, this meeting will focus on considering the decision to extend the production cut order of 2.2 barrels per day until the end of 2024, to prevent oversupply and support oil prices.

No specific reason was given for the announcement that OPEC+ would postpone the meeting by a day and move it online. Bloomberg reported that some delegates cited the poor health of Saudi Arabia's King Salman Bin Abdulaziz and the news that Iranian President Ebrahim Raisi had died in a plane crash as possible reasons for the decision.

The 22-nation alliance, led by Saudi Arabia and Russia, has decided to scale back oil production to compensate for abundant US production and fragile economic growth prospects in China, the world's largest oil buyer, and a weakening global economy in general.

Switching the meeting format to online is the “clearest sign yet of an extension” of the current production quota, said Viktor Katona, a crude oil analyst at market intelligence firm Kpler Ltd.

Most analysts expect OPEC+ members to continue implementing the agreed voluntary production cuts of 2.2 million barrels per day into November 2023.

It should be noted, however, that previous extensions to the production curbs, which were implemented by only eight members, were announced by the members themselves in separate statements, not by OPEC+. The quotas for other members were set for the remainder of 2024.

Brent North Sea crude oil prices are trading near a three-month low, around $81 a barrel.

“If oil prices fail to hold the $90/bbl target, which is a key price for most OPEC+ producers, an extension of current production cuts at the June meeting would be the most likely outcome,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Meanwhile, the International Monetary Fund (IMF) estimates that Saudi Arabia needs oil prices near $100 a barrel to finance its ambitious spending plans.

In addition to deciding whether to extend current production cuts, OPEC+ is also reviewing member countries’ production capacity, which could affect individual countries’ individual targets for 2025.

The United Arab Emirates recently made its position public with an announcement by the giant Abu Dhabi National Oil Company to increase capacity by 4.85 million barrels per day – significantly higher than OPEC's final estimate.