The Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to extend voluntary production cuts of 2.2 million barrels of crude oil a day into 2025 during a recent meeting. The decision came despite global oil prices falling by about 10% since hitting a five-month high in early April, with Brent crude trading at $82 per barrel and West Texas Intermediate at $78. The cuts were initially agreed upon in December 2022 to counter slowing demand and rising output from the United States. In addition to these cuts, Saudi Arabia announced an increase of 300,000 barrels per day for the United Arab Emirates' production quota. However, despite these efforts, global oil prices have continued to decline due in part to record US oil output and concerns about sluggish demand in China and other major economies. The International Energy Agency has cut its forecast for the growth in global oil demand this year by 140,000 barrels per day to 1.1 million barrels per day, citing weak demand in developed economies. Despite these challenges, OPEC's decision to extend production cuts is likely to keep prices high through the November presidential election as both Saudi Arabia and Russia need higher oil prices for economic reasons.
