OPEC+ oil producers agreed a complex deal on Sunday to extend their deep production cuts well into 2025.
Below is an explainer on how the latest cuts from the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, work:
OPEC+ members are currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand.
Those include three tranches:
1. 2.00 million bpd by all OPEC+ members – extended on June 2 by one year until the end of 2025 from the end of 2024.
2. 1.66 million bpd of voluntary cuts by nine members (Algeria, Gabon, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates) – extended on June 2 by one year until the end of 2025 from the end of 2024.
3. 2.20 million bpd of voluntary cuts by eight members (Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates) – extended on June 2 by three months to the end of September 2024 from the end of June 2024.
OPEC will spend one year on gradually phasing out the third tranche of cuts of 2.2 million bpd starting from October 2024 until the end of September 2025.
That means the group will curtail production by 5.86 million bpd until the end of September 2024 and gradually add barrels to the market to reach cuts of around 3.66 million bpd by October 2025.
Absolute figures will differ after OPEC on Sunday allowed a bigger 2025 oil production target for the United Arab Emirates, permitting the country to raise output by 0.3 million bpd.
The following table shows OPEC+ pledged cuts and production targets for the first three quarters of 2024 in millions of barrels per day, based on information from OPEC, individual nations and Reuters calculations.
Totals are rounded.
HOW WILL THE AGREEMENT AFFECT OPEC+ OUTPUT AFTER OCTOBER 2024?
OPEC issued a table showing how the phasing out of the 2.2 million bpd of voluntary cuts by eight countries will affect output from October 2024. Output for the other members will remain as listed in the above table through end-2025.
Source: Reuters (Editing by Dmitry Zhdannikov and Susan Fenton)