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OPEC Set to Prolong Cuts

OPEC and 11 non-members agreed to cut output by  1.8 million bpd in the first half of 2017.OPEC and 11 non-members agreed to cut output by  1.8 million bpd in the first half of 2017.

OPEC will likely agree to extend production cuts for another nine months, delegates said on Tuesday as the oil producer group meets this week to debate how to tackle a global glut of crude.

OPEC's de facto leader, Saudi Arabia, favors extending the output curbs by nine months rather than the initially planned six months, as it seeks to speed up market rebalancing and prevent oil prices from sliding back below $50 per barrel, Reuters reported.

On Monday, Saudi Energy Minister Khalid al-Falih won support from OPEC's second-biggest and fastest-growing producer, Iraq, for a nine-month extension and said he expected no objections from anyone else.

Saudi Arabia's Persian Gulf ally Kuwait said on Tuesday not every OPEC member was on board for an extension to March 2018, from the initial cut-off of June this year, but most delegates in Vienna said they expected a fairly painless meeting on Thursday.

"The Saudi oil minister's view seems accurate and no serious objection is expected if at all," said one delegate, who asked not to be identified as he is not allowed to speak to the media.

The Organization of Petroleum Exporting Countries meets in Vienna on Thursday to consider whether to prolong the deal reached in December in which OPEC and 11 non-members, including Russia, agreed to cut output by about 1.8 million barrels per day in the first half of 2017.

The first OPEC delegate said he did not believe OPEC would deepen existing cuts, unless Saudi Arabia and its allies offered to take the bulk of the hit: "I still believe it is unlikely at this point."

Falih said on Monday he expected the new deal to be similar to the old one, "with minor changes".

"Falih has talked to several countries including Norway, Turkmenistan and Egypt, and they have made signs of their willingness to join the collaboration," Kuwaiti Oil Minister Essam al-Marzouq said on Tuesday.

Norway's oil ministry said later on Tuesday it had no plan to join cuts but had a good dialogue with OPEC.

"The inclusion of smaller producing non-OPEC countries such as Turkmenistan, Egypt and the Ivory Coast would be a negligible boost, in our view," Deutsche Bank said in a note. "A deepening of cuts, though, has more potential to provide an upside surprise."

 

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