The decision to delay the increase in oil output was made by Saudi Arabia and other oil producing countries, including Russia, Iraq, and the United Arab Emirates. These countries have agreed to extend their output cuts by one month until the end of December. This move comes as oil prices have been decreasing due to weak global demand, despite the ongoing risk of potential conflicts in the Middle East.
Initially, in June, OPEC announced voluntary cuts of 2.2 million barrels a day until September, with a plan to gradually reduce the cuts month by month until they are completely eliminated by September 2025. However, these cuts were later extended until November. The latest extension until the end of December was announced on the OPEC+ alliance website. This decision will likely have an impact on global oil prices and the oil market as a whole.
The reason behind the one-month extension of the output cuts was not explicitly stated by the OPEC+ alliance. However, some analysts suggest that the decision may have been influenced by the upcoming U.S. presidential election, which takes place on Tuesday. The outcome of the election could have significant implications for the oil market, depending on the policies of the winning candidate.
The countries involved in the OPEC+ alliance, such as Saudi Arabia, Russia, Iraq, and the United Arab Emirates, play a crucial role in determining global oil prices. By extending the output cuts, these countries are seeking to stabilize the market and prevent a further decline in prices. The ongoing COVID-19 pandemic has led to a decrease in demand for oil, making it necessary for oil producing countries to adjust their output levels accordingly.
Overall, the decision to delay the increase in oil output until the end of the year reflects the ongoing challenges facing the oil market. With weak global demand and the uncertainty surrounding the U.S. presidential election, oil producing countries are taking steps to ensure stability in the market. The extension of output cuts by one month will have implications for global oil prices and the overall supply of oil in the coming months. It remains to be seen how the market will react to this latest development from the OPEC+ alliance.
