OPEC+ delayed a planned increase in output further into next year as it faces a weaker oil demand outlook.

The oil producer group agreed a complex deal in June to extend their deep production cuts well into 2025. It has since made changes to the agreement, allowing the group to postpone a planned increase in output by three months until the beginning of next year.

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. The rollout of those increases was subsequently delayed to the beginning of January 2025 through two decisions announced in September and November.

4. Under the June agreement, the United Arab Emirates was granted a higher production quota, allowing it to gradually boost output by 300,000 bpd over a period of nine months from January 2025.

OPEC+ said in June it would gradually phase out the third tranche of cuts of 2.2 million bpd by the end of September 2025.

With the changes it made to its June deal in October and November, the group will curtail production by 5.86 million bpd until the end of 2024 and gradually add barrels to the market to reach cuts of around 3.66 million bpd by October 2025.
Source: Reuters (Editing by Dmitry Zhdannikov and David Evans)