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Market Divided Over OPEC Deal, Saudi Pushes Toward 9-Month Extension

Market Divided Over OPEC Deal, Saudi Pushes Toward 9-Month Extension

Thursday, 23 November, 2017 - 16:00
A flag with the Organization of the Petroleum Exporting Countries (OPEC) logo is seen during a meeting of OPEC and non-OPEC producing countries in Vienna, Austria September 22, 2017. REUTERS/Leonhard Foeger/Files

The oil market seems to be convinced that OPEC and non-OPEC producing countries will renew the current oil cut deal after it concludes in March. However, the market is divided regarding the extension period.

A survey conducted by Bloomberg, covering 36 of the greatest analysts and businessmen, has shown that they all agreed that the cut oil will be extended for sure but the duration is uncertain.

Back to Bloomberg survey, 16 out of the surveyed expected OPEC to extend the cut oil deal nine more months while 7 others said that a six-month extension is more likely. Only one expected the extension to range between three to six months.

The reason behind this division is the latest statements of ministers. Saudi Arabia’s Energy Minister Khalid al-Faleh said in an interview with Bloomberg last week that the extension must be for a long period because the market won’t be balanced by March. His Russian counterpart however said that it is still early to know the required extension period.

UAE and Oman back the Saudi suggestion while Kuwait tends to agree more with the Russian suggestion to wait until the beginning of next year to determine the required period based on the market.

Energy Minister Alexander Novak said on Monday that Russia would determine its position later in November. Novak added that the possible extension of the deal will be discussed with Russian oil producers on Tuesday.

Reuters reported, according to reliable sources, that Saudi Arabia is pressuring oil ministers to agree next week on extending the deal for nine more months.

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