Kuwait Raises Prospect for Deeper Crude Cuts

OPEC and non-member oil producers could deepen output cuts or extend them for a year when they meet in Vienna this week as they seek to clear a global oversupply and prop up the price of crude, Kuwait said on Wednesday.

The top oil producer in OPEC, Saudi Arabia, favors extending the output curbs by nine months rather than the initially planned six months, to speed up market rebalancing and prevent crude prices from sliding back below $50 per barrel, Reuters reported.

OPEC members Iraq and Algeria as well as top non-OPEC producer Russia also said they support a nine-month extension.

As ministers gathered in Vienna for informal consultations on Wednesday, Saudi OPEC ally Kuwait said discussions included the possibility of deepening the cuts or prolonging them by 12 months.

"All options are on the table," Kuwaiti Oil Minister Essam al-Marzouq told reporters.

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

On Wednesday, a ministerial monitoring committee consisting of OPEC members Kuwait, Venezuela, Algeria and non-OPEC Russia and Oman met in the Austrian capital to discuss the progress of cuts and their impact on global oil supply. Saudi Arabia, which holds the current OPEC presidency, also attended the informal gathering. Several delegates and ministers including Algeria said they did not believe cuts could be extended to a full year.

Possible surprises could include a deepening of the cuts, but this would likely be minor because the non-OPEC producers that are expected to join the accord for the first time on Thursday, such as Turkmenistan and Egypt, are fairly small.

A more substantial cut was unlikely, one OPEC delegate said, "Unless Saudi Arabia initiates it with the biggest contribution and is supported by other Persian Gulf members."

Algeria's energy minister said he believed stocks remained stubbornly large in the first half of 2017 because of high exports from the Middle East to the United States. "Thankfully, things are improving and we started seeing a draw in inventories in the United States," Noureddine Boutarfa told Reuters.