OPEC+ agrees to extend supply cuts until 2022 to boost oil prices

The Saudis announced this after Sunday’s meeting in Vienna. The rest of the countries agreed to extend earlier supply cuts until the end of 2024.

OPEC+ accounts for roughly 40 percent of global oil production and 60 percent of exports. The group’s political decisions can therefore have a major impact on prices.

At the beginning of last October, the group pledged to cut production by two million barrels per day compared to August 2022. In connection with the deterioration of the economic outlook, several OPEC+ members committed themselves in April to a voluntary reduction in production, which began in May and is expected to last until the end of the year. The total reduction in production thus reached 3.66 million barrels per day, which represents roughly four percent of global consumption.

April’s surprise announcement of the cuts helped lift the price of Brent crude by about nine dollars a barrel above $87 in the following days. However, the price has since fallen and is trading below $73 amid concerns about further developments in global economic growth and its impact on fuel demand.

It’s possible that the latest production cuts could send oil prices higher, and with them, gasoline prices. However, there is uncertainty as to when the slow-growing world economy will return to the desire for fuels for travel and industry.