OPEC extends oil output cuts

The OPEC bloc of oil-producing nations announced Monday that it will extend oil production cuts through the end of 2024, spurring a 2 percent increase in the price of U.S. benchmark West Texas Intermediate crude oil.

Though the cartel did not identify a reason for the extension, the cuts are widely viewed as an effort by the bloc to shore up the market amid a period of increased supply and weaker demand.

OPEC Secretary-General Haitham Al Ghais dismissed concerns about lower demand in the year ahead, telling CNBC on Monday, “I think there’s a bit too much doom and gloom and pessimism in terms of the demand outlook by some corners in the market, in terms of analysts and research."

The eight members of the OPEC+ bloc — Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman — will continue the voluntary daily 2.2 million-barrel cut through December 2024, adding a month to the cutback period.

OPEC previously announced in June that the cuts would be extended through September with a plan to gradually return to previous output levels by next September. Later this year, the cartel announced a further extension through November.

“The countries also noted the recent announcement made by Iraq and the joint statement made by Russia and Kazakhstan, in which they strongly reaffirmed their commitment to the agreement including the additional voluntary production adjustments and to their compensation schedules for the overproduced volumes since January 2024,” the OPEC Secretariat said in a statement.

OPEC previously announced a cut of 1.65 million barrels a day in April 2023. In the months after Russia’s invasion of Ukraine in early 2022, the disruption to oil supplies sent gas prices to record highs, and President Biden unsuccessfully appealed to Saudi leaders to increase production.

In the meantime, however, a combination of weaker oil demand, record U.S. oil production and broader market adjustment to the production cuts has blunted their international impact.

Although gas prices were a major albatross for President Biden’s approval ratings in 2021 and 2022, a day before the 2024 presidential election the national average stood at $3.05, just two cents shy of the lowest level since May 2021.