OPEC+ Extends Oil Supply Cuts Until Mid-Year to Avert a Surplus - Bloomberg

OPEC+ Extends Oil Supply Cuts Until Mid-Year to Avert a Surplus - Bloomberg

OPEC+ extended its oil supply cutbacks to the middle of the year in a bid to avert a global surplus and shore up prices.

The curbs — which on paper total roughly 2 million barrels a day — will remain in place until the end of June, according to delegates who asked not to be identified because the information isn’t public. Group leader Saudi Arabia accounts for half of the pledged reduction.

Traders and analysts had widely expected the extension, seeing it as necessary to offset a seasonal lull in world fuel consumption and soaring production from several of OPEC+’s rivals, most notably US shale drillers. An uncertain economic outlook in China is adding to the need for caution.

Ample supplies have anchored international oil prices near $80 a barrel this year, even as conflict in the Middle East disrupts regional shipping. While that offers some relief for consumers after years of rampant inflation, prices may be a little low for many in the Organization of Petroleum Exporting Countries and its partners.

Riyadh needs a price above $90 a barrel as it spends billions on an economic transformation that spans futuristic cities and sports tournaments, according to Fitch Ratings. Its largest partner in the alliance, Russia, also seeks revenue to continue waging war on Ukraine.

In the first month of this year, the group’s implementation of the cutbacks didn’t live up to the pledged 2 million barrels a day.