Saudis: Extension of oil output cut expected

Saudi Arabia’s energy minister said Monday that he doesn’t expect any objections to a nine-month extension to the existing output cut deal between OPEC and non-OPEC members an agreement that would extend the deal through March 2018.

Late last year, the Organization of the Petroleum Exporting Countries and non-OPEC members reached a deal to cut production by 1.8 million barrels a day for six months, staring from January 2017. OPEC oil ministers will meet on Thursday in Vienna to discuss the extension.

“Everyone I talked to inside OPEC agrees with the nine-month (extension)” Khalid al-Falih told a press conference in Baghdad after a meeting with the Iraqi Prime Minister Haider al-Abadi and his Iraqi counterpart, Jabar Ali al-Luaibi. “I do not expect any objection to that trend,” al-Falih added.

He said the new deal would be similar to the current one “with some amendments” without elaborating. Al-Falih said al-Abadi gave the “green light” for Iraq to approve the nine-month extension proposal in Thursday’s meeting. Early this month, Iraq, which committed to reduce daily production by 210,000 barrels to 4.351 million barrels, said it supported a sixmonth extension, but didn’t comment on the nine-month proposal.

Iraq, where oil revenues make up nearly 95 percent of the budget, has been reeling under an economic crisis since 2014, when oil prices began plummeting from a high of over $100 a barrel. The Islamic State group’s onslaught, starting in 2014, has exacerbated the situation — forcing Baghdad to divert much of its resources to a long and costly war.

Since the start of the production cut, global oil prices have stabilized at around $50 per barrel. Al-Falih said the oil market has made a partial recovery, “but not a complete one.”

Iraq is also grappling with a major humanitarian crisis.

The U.N. estimates that more than 3 million people have been forced from their homes since 2014.