OPEC+ Agrees to Extend Production Cuts in Bid to Boost Oil Prices

OPEC+ on Sunday agreed to extend all production curbs into next year, a deal that likely signals oil prices will remain elevated through the U.S. presidential election.

The agreement comes on the same day the group’s kingpin, Saudi Arabia, launched a giant sale of shares in its national oil champion that will yield billions to help fund the kingdom’s economic transformation.

The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, agreed to keep collective curbs through next year. The group has longstanding official reductions of 3.66 million barrels a day.

Eight top producers in the group also agreed to continue voluntary cuts separately into 2025, currently around 2.2 million barrels a day, according to an OPEC+ document. But the voluntary cuts, which include a production cut of one million barrels a day from top producer Saudi Arabia, will be only maintained at the same level for three months before being gradually eased through September next year, the document says.

In effect, the agreement gives the cartel considerably leeway to make adjustments depending on market conditions.

The curbs are aimed at bolstering prices and avoiding a global surplus in a context of rising output from other nonmember producers, particularly the U.S., and concerns over demand amid high interest rates and inflation.

The price of oil, and in particular its effect on inflation and consumers’ outlook on the economy, will be closely watched in a presidential election year in the U.S. While gas prices have drifted downward of late, the extension of the production cuts is likely to keep them from falling dramatically.

Higher oil prices are also designed to boost the Saudi economy.

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