OPEC supply cut deal reduces output by 1.8 million b/d
OPEC and non-OPEC members participating in the OPEC supply cut agreement will likely extend the deal beyond the original June expiry date, according to a Reuters report on Thursday.
Three OPEC delegates who spoke with Reuters downplayed the possibility of increasing the cut beyond the 1.8 million b/d originally agreed upon.
Oil prices have recovered from under $30/barrel, but stockpiles remain high and production from non-cartel countries like the United States has been rising, keeping oil prices below $60/barrel, which is the price Saudi Arabia is hoping for.
Despite prices not reaching desired levels, OPEC officials generally believe deal is helping to balance the oil market and that the pact should be extended into the last half of 2017.
“The willingness to extend the current understanding is strong among OPEC and non-OPEC participants,” an OPEC delegate told Reuters, declining to be identified by name.
“I have doubts that more cuts will be discussed as the current agreement is yielding a positive outcome.”
OPEC officials are holding an informal meeting of the cartel’s governing board in Vienna on Thursday and Friday.
“A rollover with the same numbers,” another OPEC delegate told Reuters on Thursday, when asked about the chance of OPEC and non-OPEC pact participants agreeing to make a larger cut when they meet in Vienna at the end of the month.
According to the Reuters report, some OPEC delegates have raised the possibility of increasing the cut and others have argued the existing agreement could be tweaked.
Another official familiar with the agreement said an increase in the size of the reduction is not likely.
“I don’t expect any surprises,” this official said. “Especially now almost everyone is complying reasonably well.”
Recently, OPEC members including kingpin Saudi Arabia have supported extending the deal. On Thursday, Russian Energy Minister Alexander Novak said Moscow was leaning towards extending the accord.
In March, compliance with the agreement was at 98 per cent.