Thursday, May 25, 2017
Associated Press
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.
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 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.
Despite last year’s production cuts, oil prices have risen by less than OPEC hoped for.
At around $50 a barrel, benchmark crude is up from the sub-$30 levels reached in early 2016. Still, prices are around half the levels reached in 2014.
U.S. output since last year’s cut has increased by nearly a million barrels a day to 9 million barrels.