There was no significant change in oil prices in early trading on Monday, amid fluctuations between a slight rise and decline, while investors evaluated the OPEC Plus alliance’s decision yesterday to extend the reduction in oil production until the end of 2025 instead of the end of this year.
Brent crude futures for the nearest delivery fell 0.06 cents, or 0.06%, to $80.82 per barrel, at the time of preparing this report. US West Texas Intermediate crude futures for July delivery fell 16 cents, or 0.21%, to $76.82.
Brent crude fell 0.6% at the last settlement last week, and US West Texas Intermediate crude fell 1%.
OPEC Plus – which consists of 22 oil-producing countries, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia – is currently reducing production by a total of 5.86 million barrels per day, which represents about 5.7% of global demand.
Discounts
The cuts include 3.66 million barrels per day that were scheduled to end by the end of 2024, and voluntary cuts by 8 member states of 2.2 million barrels per day, ending by the end of June of this year.
But the coalition agreed yesterday to extend the cuts amounting to 3.66 million barrels per day for a year until the end of 2025, and to extend the voluntary cuts amounting to 2.2 million barrels per day for a period of 3 months until the end of September 2024.
OPEC Plus will gradually cancel the voluntary cuts of 2.2 million barrels per day over the course of a year, starting from October 2024 until September 2025.
Analysts said investors will take some time to calculate the production cuts and digest the decision.
Vandana Hari, founder of oil market analysis firm Vanda Insights, said: “I think in general that the decision was somewhat contrary to expectations, because the market was not expecting OPEC Plus to begin extending the cuts in the fourth quarter.”
