OPEC+ Alliance Postpones Production Cuts to 2026 Amid Gloomy Demand Outlook
The OPEC+ alliance of oil producers has delayed its plans to cancel several formal and voluntary production cuts until 2026, citing unencouraging global demand prospects. The expanded cartel has taken this measure in response to the bleak outlook.
New Production Quota
As part of its official production strategy, the coalition has now limited its combined production to 39.725 million barrels per day (bpd) until December 31, 2026, whereas it previously applied this quota only for the entire year 2025.
Voluntary Production Cuts
Eight OPEC+ members will extend their voluntary 2.2 million bpd production cut until the first quarter of 2026 and will gradually increase their production between April and September of the same year. Other members will also delay the end of a second 1.7 million bpd production cut until the end of next year, which was initially set to expire in 2025.
Moderate Oil Prices
Despite these production cuts and the months-long conflict in the Middle East, global oil prices have remained moderate for most of the year, pressured by timid demand. Geopolitical uncertainty is heightened by the imminent return of President-elect Donald Trump to the White House, who campaigned on a promise to unleash more oil production from the world's largest producer.
Weak Price Fundamentals
Oil price fundamentals remain weak, and price risks are skewed to the downside. Expectations suggest a price level around $70, a relatively fair price for producers and consumers. This price level would be a boon for Tunisia, which would gain $7.4 per barrel, translating to a significant reduction in its compensation bill.
