OPEC, Allies to Extend Oil Supply Cuts until June 2020

reports with agency

The Organisation of Petroleum Exporting Countries (OPEC) and its allies are likely to extend existing oil output cuts when they meet next month until mid-2020, as non-OPEC oil producer, Russia backs Saudi Arabia’s push for stable oil prices amid the listing of state-owned oil giant, Saudi Aramco.

OPEC will meet on December 5 at its headquarters in Vienna, Austria followed by talks with a group of other oil producers, led by Russia, known as OPEC+.

Saudi Arabia is set to announce the final pricing of the initial public offering of Aramco on December 5, in what it hopes will be the world’s largest Initial Public Offer (IPO).

The oil price at the time is likely to be key to Aramco’s listing, expected around midDecember.

Russian President Vladimir Putin set the tone for the December meeting last week, calling Saudi Arabia’s position ahead of the talks “tough”.

Moscow argued that it will find it hard to cut oil production voluntarily during the cold winter months, especially in western Siberia, where Russia produces two-thirds of its oil and where most of its well rigs are located.

Freezing temperatures make it difficult for Russia to shut in and restart wells in winter months.

“There is no doubt that Russia won’t let the Saudis down in case of a price collapse, given the upcoming IPO,” one source familiar with Russian thinking told Reuters.

He added that Putin had developed close ties with Saudi Crown Prince Mohammed bin Salman and the Russian government was aware that the three-year-old partnership could fall apart if Russia did not support Riyadh.

The OPEC+ alliance has since January implemented a deal to cut output by 1.2 million barrels per day, to help boost oil prices trading now at $62 a barrel.

“This is not only about supporting Saudi Arabia. The deal, without a doubt, is beneficial for Russia. The Russian budget