Oil prices dipped on Friday, marking the second consecutive week of losses. Brent crude futures settled at $71.12 per barrel, while US West Texas Intermediate crude futures closed at $67.20 per barrel, both showing a decline of over 1%.
This downward trend comes as the OPEC+ alliance, which includes major oil-producing nations, decided to postpone increasing production for three months until April 2025. The group also extended its production cuts by a year, pushing the end date to December 2026. This decision was driven by concerns over weakening global demand and rising production from countries outside the OPEC+ alliance.
“The coalition was pumping about half of global crude oil production,” a recent report noted. The alliance had initially planned to begin easing production cuts in October 2024. However,the slowdown in global demand has prompted them to reconsider this timeline.
The OPEC+ alliance, a powerful group of oil-producing nations, has once again delayed its decision on increasing oil production. This postponement comes amidst a complex global energy landscape marked by fluctuating demand and geopolitical tensions.
Initially, the group had aimed to boost output by 400,000 barrels per day starting in August.However, concerns about the pace of economic recovery, particularly in China, and the surge in production from countries outside the alliance have prompted repeated delays.
“We are seeing a lot of uncertainty in the market,” said one OPEC+ delegate, speaking on condition of anonymity. “Demand is not as strong as we had hoped,and we don’t want to flood the market wiht oil.”
The decision to hold off on increasing production reflects the delicate balancing act OPEC+ faces. On one hand, the group wants to support the global economic recovery by ensuring adequate oil supplies. On the other hand, it needs to protect the interests of its members by maintaining stable oil prices.
The next OPEC+ meeting is scheduled for early september, where the group will reassess the market situation and potentially make a decision on production levels.
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