The Organization of Petroleum Exporting Countries and its allies on Saturday agreed to extend the 9.7 million barrels per day production cuts through July.
What Happened
The OPEC+ countries had agreed in April to make the highest supply cuts in history for the months of May and June as the novel coronavirus (COVID-19) outbreak brought global oil demand to a near halt.
In a statement, OPEC said that the cuts along with the easing of coronavirus-related lockdowns around the world "have helped garner tentative signs of a recovery in the global economy and oil market." Nevertheless, the global oil demand "was still expected to contract by around 9 mb/d for the whole of 2020."
According to the earlier meeting in April, the production cuts were to be reduced to 7.7 mb/d for six months starting July.
Saudi Arabia, Kuwait, and the United Arab Emirates had made voluntary oil cuts of 1.18 mb/d, but aren't planning to extend them beyond June, according to a Reuters report last week.
Oil prices tanked in March and early April as coronavirus dampened demand, and Saudi Arabia and Russia engaged in a price war as they failed to come to an agreement over production cuts.
Price Action
Brent Oil futures for August were up nearly 0.5% at $42.50 at press time. The West Texas Intermediate futures for July were mostly unchanged at 39.57.
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