Oil prices fell after OPEC extended production cuts

Oil prices fell on Monday, after the Organization of the Petroleum Exporting Countries (OPEC) agreed to extend voluntary production cuts into the second quarter. The announcement was made by OPEC on Sunday and aims to support the stability of crude oil markets in the short term.

According to CNBC, Brent crude fell this Monday by 0.05% to $83.52 per barrel, and West Texas Intermediate crude fell by 0.19% to $79.82.

Saudi Arabia said it would extend its voluntary cut of 1 million barrels per day until the end of the second quarter, the state-run Saudi Press Agency reported. By the end of June, oil production in Riyadh will reach about nine million barrels per day.

On the other hand, Russia, another OPEC member, will reduce its production and export supplies by a total of 471 thousand barrels per day until the end of June. Moscow offered to reduce its supplies by 500,000 barrels per day in the first quarter.

Other OPEC producers, such as Iraq and the United Arab Emirates, will also extend their voluntary production cuts of 220,000 barrels per day and 163,000 barrels per day, respectively, until the end of the second quarter.

“This new move by OPEC clearly shows strong unity within the group, something that came into question after the November ministerial meeting, which saw Angola exit the group,” says Rystad Energy Vice President Jorge León.

The extension signals a “strong determination” to defend a price floor above $80 per barrel in the second quarter, the vice president said, adding that if OPEC cancels the cuts quickly, oil prices will fall to $77 per barrel in May.