OPEC has reportedly agreed to extend the oil production cuts for another nine months after the original agreement expires next year.
This is according to Bloomberg which on Thursday cited unnamed delegates at a ministerial meeting in Vienna, where OPEC has convened a conference to decide on whether to keep the oil production restrained beyond the previously agreed deadline.
The original deal, reached last year between OPEC and several non-OPEC nations was to lower the output by a total of about 1.8 million barrels per day. This deal is set to expire in March 2018.
According to Bloomberg, the OPEC members on Thursday made a decision to extend the production cuts beyond the March 2018 deadline, to the end of 2018, and talks are now being held to get the Russia-led non-OPEC block on board with the extension.
OPEC has yet to come out with the official statement on the outcome of its Vienna meeting. If anything is certain it is that the OPEC meeting has completed.
Namely, around 5pm local time, Khalid A. Al-Falih, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources, and President of the OPEC Conference came up on stage with Russian Energy Minister Alexander Novak, to announce the start of the third OPEC and Non-Opec meeting.
Al-Falih said that the final outcome of the OPEC meeting would be published following the deliberation with the Non-Opec nations. The third OPEC and Non-Opec meeting has begun, and it is unclear when it will be completed. UPDATE: OPEC HAS CONFIRMED. MORE HERE.
Closer to goal, commitment can waiver
It is worth noting that during his opening address ahead of the OPEC meeting on Thursday morning in Vienna, Khalid A. Al-Falih, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources, and President of the OPEC Conference said that the production cuts so far had a positive effect on the oil market, indicating its gradual move towards a more balanced condition.
“In May, the OECD stock overhang was 280 million barrels above the moving five-year average, but it has since fallen by almost 50 percent to 140 million barrels for the month of October,” he said.
“All in all, market stability has improved and the sentiment is generally upbeat. The rebalancing trend has accelerated and inventories are on a generally declining trend…All producers have benefitted from this improving situation.”
However, he warned:”History tells us that as we get closer to the goal, commitment can start to waiver. So, to achieve our goals on a sustainable basis, we must stay the course, with each member country taking full responsibility for its own contributions and not relying on others. That’s the only way to succeed.”
Worth noting, a recent statement by Saudi Arabia’s Crown Prince Mohammed bin Salman also gives reason to believe that the extension is almost certain.
He said: “The Kingdom affirms its readiness to extend the production cut agreement, which proved its feasibility by rebalancing supply and demand.”
Also, speaking to Offshore Energy Today last week, OPEC Secretary General, Mohammad Barkindo said about the upcoming meeting: “This anniversary will mark another milestone in our global efforts with our non-OPEC friends to restore stability for the global oil market.”