Vienna, Austria- Eight members of the OPEC+ group of oil-producing nations said on Sunday they were extending supply cuts until the end of December.
The move is aimed at boosting oil prices amid uncertain demand and accelerating supply, with an eye on the imminent US presidential election, though analysts predict a limited impact.
The eight countries “have agreed to extend the November 2023 voluntary production adjustments of 2.2 million barrels per day for one month until the end of December 2024”, the Vienna-based Organization of the Petroleum Exporting Countries said in a statement.
The eight from the 22-member group extending the cuts are leaders Saudi Arabia and Russia, as well as Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates.
They have been delaying production increases amid concerns over slowing demand, which has weighed on oil prices in recent months.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said the announcement was “the logical next step of the persistent downside pressure on oil prices due to sluggish Chinese and weakening global demand outlook, and ample non-OPEC supply”.
But any boost to oil prices would “unlikely” last unless OPEC+ “takes further measures to restrict production”, Ozkardeskaya told AFP.
And even then, “their restriction strategy hasn’t led to a sustainable rise of oil prices,” she said, adding the grouping now accounted for less than half of the global oil output.
Jorge Leon, an analyst with Rystad Energy, said OPEC+ was awaiting the results of the November 5 US presidential election, which “will have a significant impact on the oil market”.
“I am not so sure who would OPEC prefer but a trade war would mean lower demand,” Leon told AFP, adding a trade war was “likely” if Republican Donald Trump wins.
OPEC+ ministers are due to meet in early December in Vienna at the group’s headquarters, but with Sunday’s announcement, the eight countries have already decided not to reopen the taps until at least early 2025.
During the last ministerial meeting in June, OPEC+ announced that it wanted to increase production starting in October, though it stressed that this decision could be reviewed at any time.