Oil producers reach consensus to extend cuts

BAGHDAD / Agencies

OPEC and other major oil exporters which are currently taking part in output reduction have reached consensus to extend the limits of cuts until the end of the year, according to the Iraqi and Algerian oil ministers.
“All members of the Organisation of Petroleum Exporting Countries support an extension of the output cuts for a second six-month period,” Iraq’s Oil Minister, Jabbar Al-Luaibi, and Algeria’s Energy Minister, Noureddine Boutarfa, said on Thursday in a joint news conference in Baghdad, confirming that non-OPEC members who joined last year’s accord to curtail a global oversupply of crude, will follow suit.
“The decision is to decrease output for six months,” Boutarfa added in the news conference saying that Algeria and Iraq maintain a united stand for the next cuts.
According to a deal concluded in Vienna in December 2016, OPEC members are committed to cutting production by around 1.2 million b.p.d. while non-OPEC producers voluntarily decided to reduce output by 600,000 b.p.d., which took effect at the beginning of the year.
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 doesn’t conflict with the nation’s commitments under the output deal, Al-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. The Kuwaiti Minister of Oil, Electricity, and Water, Essam Al Marzouq, earlier this week referred to a “semi-consensus” on the extension of the production cut deal for a new six-month period during the coming OPEC and non-OPEC producers’ meeting, to be held in Vienna on May 25.