Written by 02:40 Business

OPEC Plans a Gradual Unwinding of Production Cuts

When officials from major oil-producing countries met on Sunday, they had a tricky task before them: To reassure shaky markets that they would continue to restrain oil supplies.

The group known as OPEC Plus, which is led by Saudi Arabia and includes Russia, also wanted to offer some hope to discontented producers like the United Arab Emirates that they might soon get the go-ahead to pump more oil.

Not surprisingly, the deal reached in Riyadh, the Saudi capital, on Sunday is complex. It aims to bolster oil prices by promising that deep production cuts will extend through next year.

But it also spells out a gradual phase out of a portion of the cuts. Beginning in October, oil output for eight countries, including Saudi Arabia, the United Arab Emirates and Iraq, may gradually rise in monthly increments through 2025.

Saudi production, for instance, would increase to almost 10 million barrels a day toward the end of 2025 from around nine million barrels currently, according to a table released by the Saudi government. That level is still well below Saudi Arabia’s 12-million-barrel-a-day capacity.

Given the competing interests, the deal is all that the group could have achieved, according to one viewpoint.


Last modified: 7 June 2024