Opec moves towards 9-month extension
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
Opec top oil producer Saudi Arabia favours extending the oil output curbs by nine months to speed up market rebalancing.