OPEC Plan To Extend Production Cuts For Another Nine Months
The world’s major oil countries will almost certainly extend production cuts by a further nine months at a crunch meeting this week, though they are thought highly unlikely to toughen the curbs, The Guardian said.
A landmark deal by Opec and non-Opec members, including Russia, to reduce output by 1.8m barrels a day and shore up the oil price, is due to expire at the end of June.
The agreement last November pushed the price of oil up to $50 to $55 a barrel for the past few months, up from the depths of $35 to $50 across much of 2016, when Opec’s annual revenues reached lows not seen since 2004.
But when oil ministers meet in Vienna on Thursday, where they are expected to agree a Saudi Arabia and Russia-backed nine-month extension to the cuts, their best immediate hope is that prices stay stable in the face of an oil glut.
“They have to renew, otherwise prices would collapse,” said Joe McMonigle of US investment research firm Hedgeye. “Some people are floating, ‘Oh there could be deeper cuts.’ That’s nearly impossible for most Opec members, even the Saudis.”
Opec and allies seem relatively unified on the nine-month extension, Gelder added, judging from an absence of “unhappy rumblings” ahead of the meeting. Iraq, Qatar and UAE are among club members who have publicly supported an extension.
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