Oil Producers in Consensus to Extend Reductions

OPEC and other oil producers taking part in output cuts have reached a consensus to extend the limits until the end of the year, oil ministers for two of the group’s members said.

All members of the Organization of Petroleum Exporting Countries support an extension of the cuts for a second six-month period, as do non-member nations that joined last year’s accord to curtail a global oversupply of crude, Iraq’s Jabbar al-Luaibi and Algeria’s Noureddine Boutarfa said Thursday in a joint news conference in Baghdad, Bloomberg reported.

“The decision to decrease output will be for six months, and Algeria and Iraq maintain a united stand for the next cuts,” said Boutarfa, who hosted the OPEC meeting in September 2016 where the cuts were first agreed in principle. Iraq is OPEC’s second-biggest producer. OPEC will decide formally whether to extend the cuts when its ministers meet in Vienna on May 25.

The producer group and other major suppliers including Russia agreed last year to cut their collective production by about 1.8 million barrels a day for the first half of 2017 in an effort to reduce bloated global stockpiles and re-balance the market.

The agreement included a provision to extend the cuts for a further six months if necessary, subject to a unanimous decision.

The two biggest producers participating in the cuts, OPEC’s Saudi Arabia and non-member Russia, both signaled willingness on May 8 to extend the deal.

Saudi Arabia’s Energy Minister Khalid al-Falih said he was “confident the agreement will be extended into the second half of the year and possibly beyond,” in comments at a conference in Kuala Lumpur.

Iraq will increase its production capacity to 5 million barrels a day by the end of the year, a plan that does not conflict with the nation’s commitments under the output deal, Luaibi said. It pumped 4.4 million barrels a day in April, according to data compiled by Bloomberg.

Boutarfa, representing OPEC’s ninth-biggest producer, was pivotal in forging OPEC’s preliminary deal to cut production with visits to Tehran, Moscow and Paris. His trip to Baghdad came after he attended a ministerial monitoring meeting in Kuwait in March.