Members of the OPEC+ group, which includes OPEC members and other oil-producing countries like Russia and Mexico, have extended their cuts to oil production for another three months.
This comes as an effort to support oil prices. Including some voluntary cuts by OPEC+ members, the group has cut its production by approximately 2.2 million barrels a day. However, this has been offset by rising oil production in the United States and other places like Guyana, where the maker of the Mobil lubricant and coolant range has been bringing a series of projects online.
Jefferies analyst Giacomo Romeo said to the Financial Times:
“The decision sends a message of cohesion and confirms that the group is not in a hurry to return supply volumes, supporting the view that when this finally happens, it will be gradual.”
The decision to extend the cuts was widely anticipated in the markets. Despite disruption to shipping in the Red Sea and the ongoing conflict in Gaza, oil prices have remained well below the high of $100 per barrel seen last summer.
Much of the burden for the cuts has been borne by Saudi Arabia. It is believed that the country needs oil to be priced a little under $100 per barrel to finance the ambitious programme of reform that was initiated by Mohammed bin Salman, the country’s Crown Prince.
The group’s next meeting is scheduled for June 1, with many members being keen to increase production if possible, without creating a surplus.
