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Brent crude futures for August delivery were down 19 cents at
$80.92 a barrel by 1034 GMT. U.S. West Texas Intermediate (WTI)
crude futures for July delivery slipped 23 cents to $76.76.
The Organization of the Petroleum Exporting Countries and allies
led by Russia, together known as OPEC+, are currently reducing
output by a total of 5.86 million barrels per day (bpd),
equating to about 5.7% of global demand.
The group agreed on Sunday to extend much of its cuts well into
2025 to support the market in the face of softer than expected
demand growth, protracted high interest rates in key Western
economies, worries over slow demand growth in top oil importer
China and rising non-OPEC production.
The deal includes extending 3.66 million bpd of cuts that were
due to expire at the end of 2024 until the end of 2025.
It also prolongs 2.2 million bpd of voluntary cuts that were to
expire at the end of this month but will now be kept in place
until the end of September before they are phased out gradually
by September 2025.
Some analysts described the decision as incrementally bearish
for oil prices, given it was always planned that the 2.2 million
bpd of extra cuts would be unwound gradually.
"The communication of a surprisingly detailed default plan to
unwind extra cuts makes it harder to maintain low production if
the market turns out softer than bullish OPEC expectations,"
Goldman Sachs analysts said.
These eight core members account for only about 30% of global
oil output, making it harder for the group to convince markets
that it is able to support prices when the proportion of output
it has effective control over is limited, said Callum
Macpherson, head of commodities at Investec.
"Even achieving this (deal) has come at the cost of agreeing to
output increases in 2025 on top of its plan to unwind the
voluntary cuts. It is not clear the additional supply will find
a home next year," he said.
The front-month contract for Brent, for instance, has fallen by
a few dollars since Reuters first reported such an OPEC+ deal
was in the works last week.
(Reporting by Natalie Grover in London, Mohi Narayan in New
Delhi and Emily Chow in SingaporeEditing by David Goodman)
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