Oil producers to discuss extending output curbs

VIENNA: Organisation of the Petroleum Exporting Countries (Opec) and non-Opec ministers will meet for informal consultations in Vienna in a last-ditch bid to agree the duration of oil output cuts as they seek to clear a global stocks overhang that has pulled down the price of crude.

The top oil producer in Opec, Saudi Arabia, favours extending the output curbs by nine months rather than the initially planned six months, to speed up market rebalancing and prevent crude prices from sliding back below US$50 (RM214.50) per barrel.

Opec members Iraq and Algeria as well as top non-Opec producer Russia also support a nine-month extension but some Gulf Opec members including Kuwait and the UAE have pointed to a need for further analysis.

Opec meets formally in Vienna today to consider whether to prolong the deal reached in December in which Opec and 11 non-members agreed to cut output by about 1.8 million barrels per day in the first half of 2017.

Yesterday, a ministerial monitoring committee consisting of Opec members Kuwait, Venezuela, Algeria and non-Opec Russia and Oman meets in the Austrian capital to discuss the progress of cuts and their impact on global oil supply. Saudi Arabia, which holds the current Opec presidency, will also attend.

Several Opec delegates said they expected the meetings today to be relatively painless, resulting in an output cut extension by nine months.

“I think the meeting will go smoothly,” an Opec delegate said, referring to signs of consensus in the group including Iran, which has fought Saudi Arabia in many recent Opec meetings.

Several delegates and ministers said they did not believe cuts could be extended to a full year.

Possible surprises could include a deepening of the cuts, but this would likely be minor because the non-Opec producers that are expected to join the accord for the first time today, such as Turkmenistan and Egypt, are fairly small.

Opec’s cuts have helped push oil back above US$50 a barrel, giving a fiscal boost to producers. – Reuters