Brent, WTI flat after OPEC+ extends crude oil production cuts into 2025

Crude oil prices were flat in the aftermath of the Organization of Petroleum Exporting Countries and its allies (OPEC+) announcing the decision to extend its cumulative production cuts into 2025.

August futures of global crude benchmark Brent were trading at $81.07 in the early trading hours of Monday, down marginally by 0.04% as against the previous day's close.

The U.S. West Texas Intermediate (WTI) futures for July delivery were trading 0.01% higher at $76.98 at 0340 hours GMT.

In the OPEC+ meeting held in Saudi Arabia's Riyadh on June 2, it was decided to extend the group's cumulative production cut of 1.7 million barrels per day into 2025. The output cut was earlier planned till only December 31, 2024.

Separately, a smaller group of OPEC+ members, which includes its de-facto leader and largest oil producer Saudi Arabia, will continue their additional production cuts of 2.2 million barrels per day till September 2025. This set of output cut was earlier scheduled to end in June-end.

The decision was in line with the forecasts, as analysts pointed out that demand for crude has not increased dramatically in the post-Covid-19 period. Also, the ongoing tensions in the Middle East, and the prevailing conflict between Russia and Ukraine, has not derailed the oil market, they pointed out.

Supply-demand balance

The OPEC+ is of the view that output of crude released in the international market should not outweigh the level of demand. This is essential to prevent a steep slide in the prices, according to the alliance.

Among institutions, there is a divergence related to the projected demand. The OPEC+, in its monthly oil market report released in May, predicted the global oil demand to rise by 2.25 million barrels per day by 2024-end.

However, the International Energy Agency (IEA) made contrasting claims in its report released last month. The Paris-based intergovernmental organisation sees oil demand rising by only 1.06 million barrels per day by the end of this year.