Saudi Arabia has reasserted its leadership of the oil market on Thursday after brokering its desired extension of output cuts with OPEC and non-OPEC partners through to the end of 2018.
The deal -- agreed after nearly nine hours of negotiations in Vienna -- kept its new ally Russia onside and prevented a sell-off that many analysts had feared, according to S&P Global Platts.
OPEC agreed on Thursday to extend oil output cuts until the end of 2018 as it tries to finish clearing a global glut of crude while signaling it could exit the deal earlier if the market overheats.
Non-OPEC Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival US shale firms don’t boost output further.
Two OPEC delegates said the group had agreed to extend the cuts by nine months until the end of 2018, as largely anticipated by the market.
OPEC also decided to cap the output of Nigeria at around 1.8 million bpd but had yet to agree a cap for Libya. Both countries have been previously exempt from cuts due to unrest and lower-than-normal production.
Before the earlier, OPEC-only meeting started at the group’s headquarters in Vienna on Thursday, Saudi Energy Minister Khalid al-Falih said it was premature to talk about exiting the cuts at least for a couple of quarters and added that the group would examine progress at its next meeting in June.
The Iraqi, Iranian and Angolan oil ministers also said a review of the deal was possible in June in case the market became too tight.