Opec moves to­wards 9-month ex­ten­sion

New Straits Times - - Business -

VI­ENNA: Oil pro­duc­ers within and out­side Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries (Opec) headed yes­ter­day to­wards an agree­ment main­tain­ing cuts in out­put into next year af­ter a joint com­mit­tee rec­om­mended a nine-month ex­ten­sion.

Late last year, 24 coun­tries, in­clud­ing those in Opec, agreed to cut pro­duc­tion by 1.8 mil­lion bar­rels per day.

The aim was to re­duce a global sup­ply glut that had seen the oil price plunge from more than US$100 (RM429.30) per bar­rel in 2014 to al­most US$25 in early 2016.

The agree­ment, which marked a ma­jor pol­icy turn­around for Opec, helped push prices to their cur­rent level of be­tween US$50 and US$55 per bar­rel, but was due to ex­pire on June 30.

Yes­ter­day, a joint com­mit­tee of pro­duc­ers “de­cided to rec­om­mend that the pro­duc­tion ad­just­ments of the par­tic­i­pat­ing coun­tries be ex­tended for nine months”, Opec said.

A state­ment said the com­mit­tee, while prais­ing how pro­duc­ers had ad­hered to the deal so far, also “rec­om­mend fur­ther ad­just­ment ac­tions, if deemed nec­es­sary”.

The pro­duc­ers were ex­pected to agree to the rec­om­men­da­tion at a meet­ing at Opec head­quar­ters, here, to­day.

Whether this will suc­ceed in lift­ing oil prices by much re­mains to be seen, how­ever, par­tic­u­larly be­cause of com­pe­ti­tion from the United States.

The re­cov­ery has brought many US shale oil pro­duc­ers back to life and US out­put is near­ing record lev­els.

Com­merzbank an­a­lysts pre­dicted com­pli­ance to the pro­duc­ers’ deal will “fal­ter” in the sec­ond half of the year and for the price to dip be­low US$50 per bar­rel.

Top oil pro­ducer Saudi Ara­bia has said it favours ex­tend­ing the out­put curbs by nine months to speed up mar­ket re­bal­anc­ing and pre­vent crude prices from slid­ing back be­low US$50 per bar­rel.

Bench­mark Brent crude oil was up 11 cents a bar­rel at US$54.26 at 9.47am EDT (1347 GMT) yes­ter­day. US light crude was up one cent at US$51.48. Agen­cies

AFP PIC

Opec top oil pro­ducer Saudi Ara­bia favours ex­tend­ing the oil out­put curbs by nine months to speed up mar­ket re­bal­anc­ing.

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