OPEC+ agreed on Sunday to extend most of the big oil output cuts to 2024 but begin phasing them out in 2025, beating market expectations as the group tries to prop up the market amid sluggish global demand growth, high interest rates and rising output rivals from the US, according to Reuters.

Oil prices are trading near $80 a barrel, below what many OPEC+ members need to balance their budgets. Concerns about sluggish demand growth in China, the main oil importer, weighed on prices, along with rising oil stocks in developed economies.

The Organization of the Petroleum Exporting Countries and its Russian-led allies, collectively known as OPEC+, have made a series of big production cuts from the end of 2022, according to Financialintelligence.

OPEC+ members are currently cutting production by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand. These include cuts of 3.66 million bpd, which were due to expire at the end of 2024, and voluntary cuts by eight members of 2.2 million bpd, which expire at the end of June 2024.

On Sunday, OPEC+ agreed to extend cuts of 3.66 million bpd by one year to the end of 2025 and to extend cuts of 2.2 million bpd by three months to the end of September 2024.

It also agreed to extend a third round of voluntary cuts to the third quarter of 2024, OPEC+ sources said, adding that more details were being worked out.

The countries that made voluntary reductions in the second round are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates and Gabon. The same countries, with the exception of Gabon, participated in the third round.

Amrita Sen, co-founder of think tank Energy Aspects, said: “The deal should allay market fears that OPEC+ will add barrels back at a time when demand concerns are still widespread.”

Analysts had expected OPEC to extend the voluntary cuts by several months due to lower oil prices and sluggish demand. But many analysts predicted the group would struggle to set targets for 2025 because it has yet to agree individual capacity targets for each member, an issue that has previously created tensions.

OPEC agreed to give the United Arab Emirates a higher production quota of 3.5 million bpd in 2025, up from the current level of 2.9 million.

OPEC+ also pushed back the deadline for an independent assessment of its members’ production capacities to the end of November 2025 from June 2024.

OPEC+ will hold its next meeting on December 1, 2024.