The OPEC+ group on Thursday agreed to additional output curbs of 1 million barrels per day in a move aimed at sending prices higher. The deeper reductions come alongside an extension of Saudi Arabia's unilateral reduction of 1 million barrels per day.
The move was confirmed by delegates at the meeting of the coalition of oil producers and their allies.
A lack of mention of the additional cuts in the official press release following OPEC+'s meeting led traders to believe those reductions were voluntary in nature and not official requirements. The quotas for each country were announced individually.
West Texas Intermediate (CL=F) futures sank more than 2% to close at $75.96 per barrel while Brent (BZ=F) crude, the international benchmark price settled at $82.83 per barrel.
On Thursday, Brazil confirmed it will join OPEC+ starting next year following an invitation from the group.
"Non-OPEC producing countries were largely expected to offset OPEC+ influence in the coming years. Brazil joining however should likely help put OPEC+ back in the drivers seat in the future," KPMG US energy leader Angie Gildea said immediately following the announcement.
"Further, even though weaker global economic expectations have been keeping prices relatively low right now, it just takes one wildcard event to disrupt the market and put us back in a tight supply situation that could send prices back up," added Gildea.
The market has been speculating over OPEC’s decision since the oil cartel postponed its scheduled meeting last week over reported internal disagreement about output cuts for next year.
"The dissension among the members of OPEC+ is there. And that dissension stems from ... some of the members not wanting to continue cuts because they want to get some of their market share back," Scott Bauer, CEO of Prosper Trading Academy, told Yahoo Finance shortly after the meeting was pushed back last week.
Current cuts by OPEC are aimed at constraining global supply and keeping a floor under oil prices. In April, Saudi Arabia, the largest member of the cartel, surprised the markets when it announced unilateral reductions of more than 1 million barrels per day. Russia also announced constraints of 500,000 barrels per day.
Analysts had expected OPEC would be likely to extend reductions into next year — and possibly even deepen them.
A "rollover of cuts and voluntary cuts will send the market south, for the current level of supply clamp is not enough to persuade the market that it is 'tight,'" PVM oil broker John Evans said in a recent note.
Despite the cuts, crude is almost 20% lower than the 2023 highs reached in late September amid concerns of slowing demand and increasing supply.
"I think over the next couple of months we’re going to continue to see pressure on these prices," Andy Lipow, president of Lipow Oil Associates, recently told Yahoo Finance.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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