Saudi Arabia and its OPEC+ allies have announced an extension of their oil production cuts until the end of December, marking a significant shift from their earlier plans to gradually increase output. The decision comes as the coalition grapples with persistently low crude prices, despite ongoing geopolitical tensions in the Middle East.
The collective decision, involving eight key members including Russia, Iraq, the UAE, and Algeria, maintains the existing voluntary production adjustments. The move effectively postpones the planned increase of 180,000 barrels per day, which was part of a broader strategy to unwind 2.2 million barrels of cuts over a 12-month period.
Brent crude’s performance has been particularly concerning for the group, with prices declining by approximately 14 per cent over the past year. The benchmark closed at $73 on Friday, having touched worrying lows below $70 in September—its weakest position since December 2021. The sustained price weakness, largely attributed to uncertainties surrounding Chinese demand, has prompted this cautious approach from the oil-producing alliance.
The timing of this extension carries political significance, as it pushes crucial decisions regarding 2025 production levels beyond the upcoming US presidential election. The group’s next in-person meeting is scheduled for 1 December in Vienna, where members are expected to finalise their production strategy.
Recent geopolitical events in the Middle East have created short-lived price volatility, but market focus continues to return to fundamental economic factors. Despite inflammatory rhetoric from Iranian leadership, including threats of “unimaginable” responses to recent strikes, oil prices have shown remarkable resilience to these tensions, underlining the market’s current prioritisation of economic fundamentals over geopolitical risks.
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