Opec committee proposes nine more months of oil-cuts

KUWAIT: The Organisation of Petroleum Exporting Countries (Opec) and its allies came one step closer to agreeing to extend their oil supply deal after a ministerial committee recommended another nine months of cuts.

The joint ministerial monitoring committee – composed of six Opec and non-Opec nations – agreed in Vienna yesterday to support an extension through March 2018, according to a statement on the producer group’s website.

That added to the backing for another nine months of cuts from the most influential participants in the deal, including Russia, Saudi Arabia and Iraq.

Opec and 11 non-members agreed last year to cut output by as much as 1.8 million barrels a day. The supply reductions were initially intended to last six months from January, but the slower-than-expected decline in surplus fuel inventories prompted the group to consider an extension.

US crude futures have rebounded by about 13% from a five-month low since Saudi Arabia first pro- posed maintaining the curbs into

2018.

“A nine-month extension is effectively a done deal, but because Russia and Saudi Arabia announced their support for it earlier in the month, the market may be disappointed if today’s meeting ends with ‘just’ a nine-month extension, and prices may sell off,” Amrita Sen, chief oil market analyst at Energy Aspects Ltd, said in Vienna.

Brent crude oil for July settlement rose 0.4% to US$54.35 a barrel on the London-based ICE Futures Europe exchange.

The committee discussed several scenarios for the cuts before settling on nine months, delegates said. Prior to the meeting, ministers had also mentioned the possibility of an additional six months, 12 months or even curbs extending through the whole of 2018.

The committee didn’t discuss deeper cuts and would continue to monitor the market regularly, delegates said. Oil officials from the 24 nations participating in the deal meet in the Austrian capital today to finalise their deal.