Oil producers backing cut extension
Output reductions to remain in effect for added nine months beyond June
VIENNA — OPEC countries and other producers including oil giant Russia are backing prolonging last year’s production cut to shore up crude prices, strongly indicating that an extension is a done deal even before they meet formally on the issue today.
The output reductions have been in effect since November, when the 13-country Organization of the Petroleum Exporting Countries agreed to cut production by 1.2 million barrels a day, while non-OPEC countries chipped in with a further 600,000-barrel reduction. That deal, which has helped push up oil prices, is due to expire at the end of June.
Saudi Energy Minister Khalid al-Falih noted a “trend” among participants to prolong the cuts for nine months. OPEC Secretary General Mohammad Barkindo said there is “growing consensus” for an extension.
Iranian oil minister Bijan Namdar Zanganeh told reporters there was already apparent unanimous consent “to continue the cut that we had in November.”
Jabbar Ali Hussein Al-Luiebi, his Iraqi counterpart, said: “We support the proposal for nine months.”
A committee of all nations participating in the cuts also recommended a nine-month extension on Wednesday.
Non-OPEC countries that are part of the deal will attend the meeting, including Russia’s Energy Minister Alexander Novak.
But in the longer term, there are concerns among OPEC countries that higher oil prices may end up being counterproductive as they encourage U.S. shale gas producers to re-enter the market — a development that could weigh on oil prices.