OPEC agrees on 9 month extension of output cuts

Baku, July 2, AZERTAC

OPEC on Monday agreed a nine month extension of production cuts until the end of March 2020 to balance oil markets and shore up prices.

The decision to extend the deal was taken at a meeting of 14-member group in Vienna with Iran backing the extension.

Saudi Arabia’s oil minister Khalid Al Falih as well as Venezuelan oil minister Manuel Salvador Quevedo Fernandez, who is also the president of OPEC conference, confirmed the extension of the deal during a press conference in Vienna that was shown live on the OPEC website.

“We are committed to a nine-month extension in unequivocal, very solid and very strong way. Conformity levels for the second half is going to be better and different,” said Al Falih after the end of marathon talks at the OPEC secretariat in Vienna.

He also said the global economy in the second half looks much better due to resumption of trade negotiations between China and the US.

On oil prices not gaining much on the extension of the deal, Al Falih said he doesn’t get excited by daily price fluctuations and various factors impact how markets react.

“Mid to long term is important,” he said.

The conference also approved the draft text of the Charter of Cooperation with non-OPEC members and requested OPEC countries to take it through their respective national processes.

OPEC and its allies are currently cutting production by 1.2 million barrels per day to rebalance oil markets in terms of demand and supply and support oil prices.

Saudi Arabia, UAE and other countries supported the extension of the deal with Al Falih saying on Twitter that Russian President Vladimir Putin and Crown Prince Mohammad Bin Salman agreed to extend the agreement starting from July.

“Once again, the agreement confirms that the Saudi-Russian partnership paves the way for ensuring the interests of producers and consumers and sustaining the growth of the world economy,” said Al Falih ahead of the OPEC meeting.

UAE also backed the deal. “I’m for an extension, I think it’s needed for the current conditions of the market,” UAE energy minister Suhail Al Mazrouei told reporters in Vienna. “So I’m expecting a rather easier meeting.”

“Since our last meeting in December 2018, we saw an improvement in market conditions over the first part of the year, particularly when compared to the turbulence and volatility of the fourth quarter of 2018,” said Quevedo Fernandez, Venezuela’s oil minister and President of the OPEC Conference, during his opening address.

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