Vienna, Austria — The OPEC+ group of oil-producing nations agreed Sunday to extend their production cuts in a bid to support prices, as economic and geopolitical uncertainty looms over the market.  

The 12-member oil cartel and its 10 allies decided to “extend the level of overall crude oil production… starting 1 January 2025 until 31 December 2025,” a statement by the alliance said.  

In addition, eight countries said they would also extend voluntary supply cuts made at Riyadh’s request to further support the market: Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.  

Some of those cuts will run until September before being phased out, while others will be kept in place until December 2025.  

The decisions came after the biannual meeting of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and its 10 partners, headed by Russia.  

The group-wide supply cuts amount to about two million barrels per day (bpd).  

Adding the series a voluntary cuts, OPEC+ members are currently slashing output by almost six million barrels per day overall to bolster flagging oil prices.   

‘Positive surprise’ 

OPEC+ also agreed to allow the United Arab Emirates to increase its production target by 300,000 bpd for next year, a statement said.  

The UAE had pledged to make additional voluntary output cuts at the request of Saudi Arabia, which wanted to share the burden of cuts in an effort to support prices.   

UBS analyst Giovanni Staunovo called Sunday’s announcements a “positive surprise.” 

The decision “removes some uncertainty over some tensions down the road, as the quotas will now be reviewed end 2025 for 2026,” Staunovo told AFP.  

Negotiations about the production quotas of member countries have repeatedly been a source of discord in the past, triggering heated debates and even shock departures.   

At the end of 2023, Angola exited OPEC over a disagreement on output cuts.  

But according to Mukesh Sahdev at the Rystad Energy research group, the alliance still faces the issue of “actual barrels flowing to the market likely being higher than what is accounted for”, which could potentially undermine the cartel’s strategy.  

Moreover, Iraq and Kazakhstan exceeded their quotas in the first quarter, while Russia overproduced in April.   

‘Challenging environment’  

Amid questions surrounding global demand, some analysts say that gradually allowing oil to return to the markets without causing prices to plummet will prove challenging.  

Producers will probably have to come up with a complex system to skillfully reintroduce barrels that were previously removed, without causing prices to crater.  

Oil prices have changed little since the last meeting in November, hovering at around $80 a barrel.  

OPEC continues to stick to its demand forecasts for 2024, while the International Energy Agency has lowered its estimates.  

Amid “above-average inflation, slowing global growth outlook, central bank uncertainties, rising US oil production and Middle East tensions, the environment is challenging”, said Ipek Ozkardeskaya, a market analyst at Swissquote Bank.
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DUBAI — The next CEO of Boeing BA.N should have an understanding of what led to its current crisis and be prepared to look outside for examples of best industrial practices, the head of the International Air Transport Association said on Sunday.

U.S. planemaker Boeing is engulfed in a sprawling safety crisis, exacerbated by a January mid-air panel blowout on a near new 737 MAX plane. CEO Dave Calhoun is due to leave the company by the end of the year as part of a broader management shake-up, but Boeing has not yet named a replacement.

“It is not for me to say who should be running Boeing. But I think an understanding of what went wrong in the past, that’s very important,” IATA Director General Willie Walsh told Reuters TV at an airlines conference in Dubai, adding that Boeing was taking the right steps.

IATA represents more than 300 airlines or around 80% of global traffic.

“Our industry benefits from learning from mistakes, and sharing that learning with everybody,” he said, adding that this process should include “an acknowledgement of what went wrong, looking at best practice, looking at what others do.”

He said it was critical that the industry has a culture “where people feel secure in putting their hands up and saying things aren’t working the way they should do.”

Boeing is facing investigations by U.S. regulators, possible prosecution for past actions and slumping production of its strongest-selling jet, the 737 MAX.

‘Right steps’

Calhoun, a Boeing board member since 2009 and former GE executive, was brought in as CEO in 2020 to help turn the planemaker around following two fatal crashes involving the MAX, its strongest-selling jet.

But the planemaker has lost market share to competitor Airbus AIR.PA, with its stock losing nearly 32% of its value this year as MAX production plummeted this spring.

“The industry is frustrated by the problems as a result of the issues that Boeing have encountered. But personally, I’m pleased to see that they are taking the right steps,” Walsh said.

Delays in the delivery of new jets from both Boeing and Airbus are part of wider problems in the aerospace supply chain and aircraft maintenance industry complicating airline growth plans.

Walsh said supply chain problems are not easing as fast as airlines want and could last into 2025 or 2026.

“It’s probably a positive that it’s not getting worse, but I think it’s going to be a feature of the industry for a couple of years to come,” he said.

Earlier this year IATA brought together a number of airlines and manufacturers to discuss ways to ease the situation, Walsh said.

“We’re trying to ensure that there’s an open dialogue and honesty,” between them, he said.
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