OPEC+ extended the production cut agreement to seek a new path of oil price stability

Recently, OPEC+ at a meeting in Riyadh, decided to extend the crude oil production cut agreement in order to boost the fragile oil market. The move aims to balance different interests while ensuring the stability of crude oil prices. However, the agreement also specifies the portion of crude oil that will be gradually restored later this year, showing a careful consideration of market supply and demand.

Under the New Deal, OPEC+ will extend "voluntary" production cuts by key members, including Saudi Arabia and Russia, until late next year. The decision exceeded the expectations of some market watchers, showing the organization's keen insight and proactive response to market dynamics. However, the agreement also provides for cuts to be reduced from October this year, earlier than some observers had predicted, reflecting OPEC+ 's cautious approach to balancing supply and demand in the market.

Saudi Arabia, as the leader of OPEC+, played a key role in the deal. Saudi Energy Minister Prince Abdulaziz bin Salman said after the meeting that the kingdom would maintain a cautious and pre-emptive approach, including the possibility of suspending or even reversing the phasing out of production cuts. This statement shows Saudi Arabia's determination and strategy in maintaining the stability of oil prices.

Recently, crude oil prices have shown a downward trend, and investors' doubts about the pace of interest rate cuts in major industrialized economies have added to the uncertainty in the market. Ahead of the meeting, traders and analysts had widely expected OPEC+ to extend its production cuts to offset surging output from rivals. However, the details of the new agreement and its implementation remain to be seen.

Under the New Deal, the eight countries participating in the additional cuts will add about 750,000 barrels per day of production in January. The move is aimed at gradually restoring supply to the market without causing too much of a shock to oil prices.

The process of the extended meeting has been twists and turns. Some countries, including Iraq, the United Arab Emirates and Russia, have indicated they are considering increasing production, while Iran has also announced it will increase oil production, sparking concerns about oversupply. However, after consultations and consultations, the parties finally reached a consensus to extend the production cut agreement.

The new agreement also specifies OPEC+ production quotas and plans to increase production. The UAE's demand for increased production was met, with OPEC+ confirming a daily output of 39.725 million BPD for 2025. This figure is an increase from the current level, showing the expectation and preparation for future market demand.

In addition, OPEC+ reaffirmed the important responsibilities of the Joint Ministerial Monitoring Committee (JMMC) and authorized it to hold additional meetings or call for OPEC and non-OPEC ministerial meetings if necessary. The establishment of this mechanism helps to strengthen coordination and cooperation within the organization to cope with market emergencies and challenges.

However, in the face of uncertainty about monetary policy and the global economic outlook, international oil prices still face many challenges. The latest Fed minutes poured cold water on the prospect of a rate cut, which put bearish pressure on oil prices. At the same time, geopolitical risks may also have an impact on oil prices. Although oil supplies have been largely unaffected by the conflict for now, it is worth watching how the situation develops in the future.

The extension of the OPEC+ production cut agreement is a positive response to the complex and volatile market environment. The organization seeks to stabilize oil prices by balancing supply and demand in the market and coordinating the interests of its members. However, future market movements are still influenced by a number of factors, including monetary policy, the global economic outlook and geopolitical risks. Therefore, investors and consumers need to remain vigilant and pay close attention to market dynamics and changes.