OPEC+ Agrees to Extend Production Cuts to June 2024

OPEC+ agreed to extend the current oil production curbs to the middle of the year to keep the balance of the global oil supply, according to the report by Bloomberg, citing a source close to the matter. 

The Organization of the Petroleum Exporting Countries and its allies, led by Russia, altogether known as OPEC+, will maintain the output reductions amount to roughly 2 million barrels a day until the end of June.

Saudi Arabia, as a leader of the organization, pledged for half of the reduction agreed by the group. 

One of the main reasons for the production cut is to shore up prices. According to Fitch Ratings, Riyadh needs the prices to be above $90 a barrel to make up for billions of dollars it spent on an economic transformation.

Still, a cut of two million barrels of oil per day is only on paper as the group in the first month of this year did not contribute to the amount they agreed upon.

In the first month of this year, the group’s implementation of the cutbacks didn’t live up to the pledged 2 million barrels a day.

Iraq and Kazakhstan reportedly and collectively pumped several hundred thousand barrels above their quotas a day. The two countries promised to improve their compliance to the organization and to compensate for the overproduction.