Opec agrees to extend oil output cuts by 9 months to end-2018
VIENNA: The Organisation of the Petroleum Exporting Countries (Opec) agreed yesterday to extend oil output cuts until the end of next year as it tries to finish clearing a global glut of crude while signalling it could exit the deal earlier if the market overheats.
Non-Opec Russia, which this year reduced production significantly with Opec for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival United States shale firms don’t boost output further.
The producers’ current deal, under which they are cutting supply by about 1.8 million barrels per day (bpd) in an effort to boost oil prices, expires in March.
Two Opec delegates said the group had agreed to extend the cuts by nine months until the end of next year, as largely anticipated by the market.
Opec also decided to cap the output of Nigeria at around 1.8 million bpd but had yet to agree a cap for Libya.
Both countries have been previously exempt from cuts due to unrest and lower-than-normal production.
Opec has yet to meet with non-Opec producers led by Russia, with the meeting scheduled to begin after 1500GMT.
Before the earlier Opec-only meeting started at the group’s headquarters, here, yesterday, Saudi Energy Minister Khalid al-Falih said it was premature to talk about exiting the cuts at least for a couple of quarters and added that the group would examine progress at its next meeting in June.
“When we get to an exit, we are going to do it very gradually... to make sure we don’t shock the market,” he said.
The Iraqi, Iranian and Angolan oil ministers also said a review of the deal was possible in June in case the market became too tight.
International benchmark Brent crude rose more than one per cent yesterday to trade near US$64 (RM263) per barrel.
With oil prices rising above US$60, Russia has expressed concerns that such an extension could prompt a spike in crude production in the US, which is not participating in the deal. Reuters