OPEC set to prolong oil output cuts by nine months
OPEC is likely to extend production cuts for another nine months, ministers and delegates said on Tuesday as the oil producer group meets this week to debate how to tackle a global glut of crude.
OPEC’s top producer, Saudi Arabia, favors extending the output curbs by nine months rather than the initially planned six months, as it seeks to speed up market rebalancing and prevent oil prices from sliding back below $50 per barrel.
On Monday, Saudi Energy Minister Khalid al-Falih won support from OPEC’s second-biggest and fastest-growing producer, Iraq, for a nine-month extension and said he expected no objections from anyone else.
The Organization of the Petroleum Exporting Countries meets in Vienna on Thursday to consider whether to prolong the deal reached in December in which OPEC and 11 non-members, including Russia, agreed to cut output by about 1.8 million barrels per day in the first half of 2017.
The decision pushed prices back above $50 per barrel, giving a fiscal boost to major oil producers. But it also spurred growth in the U.S. shale industry, which is not participating in the output deal, thus slowing the market’s rebalancing.
Saudi Arabia’s Gulf ally Kuwait said on Tuesday not every OPEC member was on board yet for an extension to March 2018, but most ministers and delegates in Vienna said they expected a fairly painless meeting.
Ecuador Oil Minister Carlos Perez said OPEC and other oil-producing countries would discuss a six- or nine-month extension to output cuts and probably choose the latter.
“Six and nine months are both proposals on the table … we will support the majority, probably the nine months,” Perez, whose country is in OPEC, told reporters after arriving in Vienna on Tuesday.