At its December 5 meeting, OPEC+ made further changes to its oil production policy, postponing the planned increase in production until next year, given the weakening outlook for oil demand. oil.
On Thursday, the group of oil producers pushed back the start of the increase in oil production by three months, until April 2025, and extended the full unwinding by one year, until the end of 2026 reductions, due to weak demand and the expansion of production outside the group.
Below is an explanation of how the latest cuts from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, work:
OPEC+ members are currently cutting production by a total of 5.85 million barrels per day (bpd), or about 5.7% of global demand.
These reductions are divided into three tranches:
1. 2.00 million bpd by all OPEC+ members – extended on December 5 for one year until the end of 2026 from the end of 2025.
2. 1.65 million bpd of voluntary reductions by eight members (Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and United Arab Emirates) – extended on December 5 for one year until the end of 2026 from the end of 2025. When it was first announced in 2023, Gabon was part of the agreement and the total reductions amounted to 1.66 million bpd.
3. 2.20 million bpd of voluntary reductions by eight members (Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and United Arab Emirates) – extended on December 5 by three months until the end of March 2025 at from the end of December 2024.
4. Under the December 5 agreement, the UAE was granted a higher production quota, allowing it to gradually increase production by 300,000 bpd over a period starting in April 2025, i.e. three months later than planned, until the end of September 2026.
HOW WILL THE AGREEMENT AFFECT OPEC+ PRODUCTION AFTER MARCH 2025?
OPEC+ released a table, reproduced below, showing how the phasing out of 2.2 million bpd of voluntary cuts by eight countries and the UAE's increase will affect production from April 2025. Production from other OPEC+ members will remain stable until the end of 2026.
