The Opec+ group of oil producers have agreed to extend most of their production curbs into next year, in an attempt to shore up crude prices.
After a ministerial meeting in Riyadh on Sunday, the Opec cartel and allies including Russia decided to extend a cut of 2m barrels a day until the end of 2025, rather than ending it at the end of 2024.
In a statement, Opec said the group had agreed to “extend the level of overall crude oil production for Opec and non-Opec participating countries … starting 1 January 2025 until 31 December 2025.”
A group of Opec+ members agreed to extend other, voluntary cuts, which were also meant to support oil prices amid subdued global demand.
Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman gathered on the sidelines of the Riyadh meeting, and pledged to extend their additional voluntary cuts of 1.65m barrels a day until the end of December 2025.
A second group of additional voluntary cuts totalling 2.2m barrels per day (bpd), announced in November 2023, will now be extended until the end of September 2024 – and then phased out over the next year.
The cuts aim to “support the stability and balance of oil markets”, said Saudi Arabia’s Ministry of Energy in a statement.
Opec also agreed a new output target for the UAE – it will be allowed to gradually raise production by 300,000 bpd, up from the current level of 2.9m bpd.
The Brent crude oil price weakened last month, falling from almost $88 (£69) a barrel at the end of April to $81.62 at the end of May.
The meeting in Riyadh came as Saudi Arabia, the largest oil producer within Opec, began the sale of 1.545m shares in the mostly state-owned producer Aramco, or about 0.64% of shares in issue, which could raise $12bn.
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This secondary share sale comes five years after Aramco was floated on the public markets, in the world’s largest initial public offering ever. It runs until Thursday, and saw strong interest from investors on Sunday when demand already exceeded the amount of shares on offer.
Bill Blain, the market strategist at Wind Shift Capital, said Saudi Arabia was using the wealth of its oil reserves to innovate and diversify its economy.
“Although some of the projects at the core of the reinvention of Saudi have already been scaled back due to escalating costs, and its purchase of global sports franchises is generally misunderstood, the plan is to fuel the economy with plentiful investment by the state SWF, the Public Investment Fund,” he added.