Opec extends 1.8m barrel daily cut in oil production

Cartel agrees to prolong curbs on supply for another nine months

A TV camera is seen inside the headquarters of the Organization of the Petroleum Exporting Countries (Opec) in Vienna, Austria. Photograph: Reuters

A TV camera is seen inside the headquarters of the Organization of the Petroleum Exporting Countries (Opec) in Vienna, Austria. Photograph: Reuters

 

Opec will extend its production cuts into 2018, as the oil cartel and its allies attempt to end a three year supply glut that has hammered crude prices.

The cartel has agreed to prolong supply curbs for another nine months during a ministerial meeting on Thursday in Vienna, two Opec delegates familiar with the discussions said.

The agreement, which is expected to be ratified later today by Russia and other producers outside Opec, will see the 1.8 million barrel a day accord first agreed in late November extended to March 2018.

Ahead of the gathering in Vienna, Saudi Arabia’s powerful energy minister Khalid al Falih said it was “high likely” Opec and producers outside the cartel will roll over the November deal.

The kingdom has allied with Russia in vowing to rebalance the market after the halving of oil prices since 2014 decimated the budgets of oil-dependent producers and upended the global energy industry.

“We have said we will do whatever is necessary,” Mr Falih said before the meeting, adding that existing production curbs would, given time, prove “more than sufficient”.

Brent, the global oil marker, was down 58 US cents at $53.37 a barrel, partly on disappointment the cuts had not been increased in size or extended for even longer.

Saudi Arabia and Russia have spent the past week garnering broad-based support to extend the cut.

“Although Opec hasn’t achieved its stated aim of a global glut of oil inventories back to normal levels – thanks mainly to a resurgent US shale oil industry which has taken up much of the slack in the reduced Opec output – revenues have improved,” said Darragh Crowley, energy trader with Bord Gáis Energy.

“Despite the production limit,the International Energy Agency has calculated that the cartel earned almost $75million extra per day in the first quarter of this year compared with the last quarter of 2016.” – Copyright The Financial Times Limited 2017