Eight members of the OPEC+ group of oil-producing nations agreed on Thursday to extend their voluntary supply cuts until the end of November, postponing a planned output increase amid falling crude prices.
Concerns about slowing demand in China and the United States have weighed on oil prices recently, with benchmark West Texas Intermediate plunging below $70 a barrel for the first time in 13 months.
Brent crude oil was trading at $72.60 (R1,290) per barrel on Friday, well down from its August average of $78.50. This could bode well for another significant fuel price cut in South Africa if oil maintains these low levels. On Wednesday, September 4, petrol decreased by 92 cents, bringing the price to its lowest level this year.
Cuts to be gradually phased out
The eight OPEC+ nations are Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
Their voluntary supply cuts of 2.2 million barrels per day (bpd) will be extended "for two months until the end of November 2024", the alliance said in a statement.
The cuts will be "gradually phased out on a monthly basis starting December 1, 2024", the statement said, adding that the agreement provided for "the flexibility to pause or reverse the adjustments as necessary".
At the alliance's last ministerial meeting in June, OPEC and its allies announced that they would gradually start to increase production from October.
"Even if OPEC+ plays it safe, their decision to extend the production cuts to the year end may not suffice" to buttress prices, said Ipek Ozkardeskaya, analyst at Swissquote, as investors are "worried about waning demand prospects on deteriorating global macro setup".
AFP