Global oil prices fell below the USD 80/barrel mark just a day after the Organization of Petroleum Exporting Countries (OPEC+) meeting where oil-producing countries agreed to extend output cuts into 2025.
- Kenya’s supplier UAE Murban eased by 3.6% to USD 78.93/barrel while the global benchmark Brent Crude oil decreased by 3.5% to USD 78.17/barrel.
- Additionally, WTI eased by 3.8% to USD 74.01/barrel, all falling below the USD 80.00/barrel mark on Monday.
- In the Sunday meeting, OPEC+ agreed to not only extend supply cuts through 2025 but also allow the phasing out of voluntary cuts of 2.2 million barrels per day from October 2024.
Additionally, the United Arab Emirates got an extra production boost of 0.3 million barrels per day in 2025 following a consistent push of higher production. The group agreed to extend the additional voluntary cuts of 1.65 million barrels per day that were announced in April 2023, until the end of December 2025.
Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman held a meeting in Riyadh on the sidelines of the 37th OPEC and non-OPEC Ministerial Meeting (ONOMM). The meeting aimed at underpinning precautionary efforts of OPEC+ countries and to bolster oil prices.
The group agreed to extend the additional voluntary cuts of 1.65 million barrels per day that were announced in April 2023, until the end of December 2025.
“Moreover, these countries will extend their additional voluntary cuts of 2.2 million barrels per day, which were announced in November 2023, until the end of September 2024, and then the 2.2 million barrels per day cut will be gradually phased out on a monthly basis until the end of September 2025 to support market stability. This monthly increase can be paused or reversed subject to market conditions” said OPEC in a statement.
The next OPEC and non-OPEC Ministerial Meeting will be held on 1st December 2024.
Why it Matters
With the expected surplus supply as a result of gradually phasing out the production cuts, which came in earlier than expected, oil prices are seeing a bearish trend in the medium term with dimming demand pressures. OPEC+ remains cautious stating that decisions would be market-dependent and therefore subject to change.
Since the November 2023 meeting, oil prices have been ranging around the $80/barrel mark. Despite the recent price drop, global oil prices remain prone to geopolitical tensions in the Middle East and Ukraine.
In Kenya, the effects of global oil price increases and decreases lag on account of different landing cost prices and exchange rates used during the review cycles by EPRA.
