Opec decided yesterday to extend cuts in oil output by nine months to March 2018 as the producer group battles a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
The extended reductions are likely to be carried out once again in tandem with a dozen non-members led by top oil producer Russia, which reduced output with the Organisation of the Petroleum Exporting Countries from January.
Opec’s cuts have helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers.
Oil’s earlier price decline, which started in 2014, forced Russia and Saudi Arabia to tighten their belts and led to unrest in some producing countries including Venezuela and Nigeria.
The price rise this year has spurred growth in the US shale industry, which is not participating in the output deal, thus slowing the market’s rebalancing with global crude stocks still near record highs.
The nine-month extension of the cuts – from output levels in October 2016 – was largely expected by the market.
By 1430 GMT, Brent crude was 0.7% down at around $53.50 per barrel, having pared earlier losses after Opec said it would not deepen the cuts or extend them by as long as 12 months.
In December, Opec agreed its first production cuts in a decade and the first joint cuts with non-Opec producer nations, led by Russia, in 15 years.
The two sides decided to remove about 1.8mn barrels per day (bpd) from the market in the first half of 2017 – equal to 2% of global production.
Yesterday, Opec agreed to keep its own cuts of around 1.2mn bpd in place for nine months, Kuwaiti Oil Minister Essam al-Marzouq said.
Opec oil ministers were continuing their discussions with non-Opec producers.
Opec delegates said the proposal for joint cuts was also around 1.8mn bpd, which would see non-Opec producers cut under 600,000 bpd.
Despite the output cut, Opec kept exports fairly stable in the first half of 2017 as its members sold oil from stocks. Business Page 1
Energy and Industry Minister HE Dr Mohamed bin Saleh al-Sada arrives for the Opec meeting in Vienna yesterday.
