OPEC set to prolong oil output cuts by nine months
VIENNA: OPEC is likely to extend production cuts for another nine months, ministers and delegates said as the oil producer group meets this week to debate how to tackle a global glut of crude.
OPEC’s top producer, Saudi Arabia, favours extending the output curbs by nine months rather than the initially planned six months, as it seeks to speed up market rebalancing and prevent oil prices from sliding back below US$ 50 per barrel.
On Monday, Saudi Energy Minister Khalid al-Falih won support from OPEC’s second-biggest and fastest-growing producer, Iraq, for a nine-month extension and said he expected no objections from anyone else.
The Organization of the Petroleum Exporting Countries meets in Vienna on Thursday to consider whether to prolong the deal reached in December in which OPEC and 11 non-members, including Russia, agreed to cut output by about 1.8 million barrels per day in the first half of 2017.
The decision pushed prices back above US$ 50 per barrel, giving a fiscal boost to major oil producers.
But it also spurred growth in the US shale industry, which is not participating in the output deal, thus slowing the market’s rebalancing.
Saudi Arabia’s Gulf ally Kuwait said on Tuesday not every OPEC member was on board yet for an extension to March 2018, but most ministers and delegates in Vienna said they expected a fairly painless meeting.
Ecuador Oil Minister Carlos Perez said OPEC and other oil-producing countries would discuss a six- or nine-month extension to output cuts and probably choose the latter.
“Six and nine months are both proposals on the table ... we will support the majority, probably the nine months,” Perez, whose country is in OPEC, told reporters after arriving in Vienna on Tuesday.
Asked whether deeper cuts would be discussed, he said: “Not at this point, I don’t think so.” Noureddine Boutarfa, energy minister of OPEC member Algeria, said OPEC was discussing a possible nine-month extension, with curbs kept at the same level as under the group’s existing deal.
“Right now we are talking about nine months,” Boutarfa told reporters in the Austrian capital.
Falih also arrived in Vienna on Tuesday but made no comment to reporters.
“The Saudi oil minister’s view seems accurate and no serious objection is expected if at all,” said one OPEC delegate, who asked not to be identified as he is not allowed to speak to the media.
“No surprises,” said a second delegate.
Many OPEC meetings in recent years witnessed bitter fights between Saudi Arabia and its rival Iran, OPEC’s third-largest oil producer.
Tehran has kept relatively quiet in the past few weeks, saying it saw a need to extend cuts. — Reuters