The time preposition by basically means before. So:
- We need to finish the report by 5pm.
means:
- We need to finish the report before 5pm.
Until signifies the minimum duration of a situation or activity. So:
- Stay in the office until 5pm
Means that the "staying in the office" situation should continue till 5pm. In other words the sentence means:
- Only leave the office after 5pm.
The Original Poster's example:
Imagine that it takes some time to extend negotiations. Perhaps everybody needs to fill in many forms. There's a lot of administration to do, if you want to extend negotiations. Now look at this sentence:
They decided to extend the negotiations by July 1, 2015.
This sentence means that they decided to finish all the administration for the extension before July 1, 2015.
Now look at this sentence:
They decided to extend the negotiations until July 1, 2015.
This means that the minimum duration of the negotiations is from now to July 1, 2015. The negotiations will not finish till July 1, 2015.
Hope this is helpful!