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Vienna Likely to Extend Oil Production Cuts

Vienna Likely to Extend Oil Production Cuts

Thursday, 30 November, 2017 - 11:15
Saudi Energy Minister alongside his Cuban and Russian counterparts at an Organization of the Petroleum Exporting Countries (OPEC) presser. PHOTO: AFP

OPEC and Russia seem to be moving toward extending the oil production cut agreement until the end of 2018, but have hinted reconsidering the agreement when they meet again in June.

In response, oil prices had edged up on Thursday, ahead of OPEC’s meeting during which producers are expected to extend a supply-cut deal that came into effect in January with the goal of tightening supplies and propping up prices.

A committee of OPEC energy ministers and independent producers, including Saudi Arabia and Russia, recommended that OPEC and non-OPEC allies extend oil production cuts by nine months at a meeting in Vienna on Tuesday.

"The (oil) market has not yet achieved full stability, and there is a need for further action beyond April 1," Russian Energy Minister Alexander Novak said.

“Everyone (in the committee) recommends extending the agreement.”

Novak met his Saudi counterpart Khalid al-Falih on Wednesday, one day before a full OPEC meeting in Vienna to discuss oil prices, the Russian energy ministry said in a statement on Twitter.

With oil prices above $60 a barrel, Russia has questioned the effectiveness of extending the current production cuts of 1.8 million barrels per day until the end of next year-- such a move could lead to an increase in US production.

Six ministers from oil-producing countries within and outside OPEC held a meeting to decide on recommendations.

OPEC is scheduled to organize an open session, including media, at (0900 GMT) in Vienna on Thursday, before going into a closed session at noon, according to a tentative program on OPEC’s website. Non-OPEC ministers are set to join at 3 p.m., followed by a joint press conference after the meeting.

The production cuts have been in place since the start of 2017 and helped halve an excess of global oil stocks although those remain at 140 million barrels above the five-year average, according to OPEC.

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