Oil prices fall despite OPEC+ output curbs

3 Jun 2024 , 08:44 AM

Despite a decision by producer group OPEC+ to maintain significant supply curbs well into 2025, oil prices dipped early on Monday.

August delivery Brent futures were down 24 cents, or 0.3%, to $80.87 a barrel. The July delivery of U.S. West Texas Intermediate (WTI) oil futures dropped 19 cents, or 0.25%, to $76.80.

The Organisation of the Petroleum Exporting Countries (OPEC+) and its allies, led by Russia, are now reducing production by a cumulative amount of 5.86 million barrels per day (bpd), or around 5.7% of the world’s consumption.

This comprises 2.2 million bpd of voluntary cutbacks by eight members that will expire by the end of June 2024, and 3.66 million bpd of cuts that were scheduled to expire at the end of 2024.

However, the group decided on Sunday to prolong the 3.66 million bpd reductions by one year, till the end of 2025. Additionally, it will extend the 2.2 million bpd reductions by three months, to end-September 2024, before gradually phasing them off over the course of a year, from October 2024 to September 2025.

Middle East peace negotiators in Gaza called on Israel and Hamas to complete the cease-fire and hostage-release agreement proposed by US President Joe Biden. However, Israel has stated that the war would not officially end as long as Hamas holds power. Israel declared that it was evaluating a ruling substitute for the group supported by Iran.

Israel has agreed to a framework agreement for ending the Gaza War, according to a spokesperson for Prime Minister Benjamin Netanyahu. Despite this, the spokesperson acknowledged the agreement was incomplete and needed extensive revision.

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