Russia's Energy Minister Alexander Novak, Venezuela's Oil Minister Manuel Quevedo, OPEC Secretary General Mohammad Barkindo and Saudi Arabia's Oil Minister Khalid Al-Falih during the beginning of an OPEC and NON-OPEC meeting in Vienna. (Reuters)
OPEC and its allies led by Russia agreed to extend oil output cuts until March 2020 on Tuesday, seeking to prop up the price of crude as the global economy weakens and US production soars.
The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the United States, which has overtaken Russia and Saudi Arabia to become the world’s top producer.
Benchmark Brent crude has climbed more than 25% so far this year after Washington tightened sanctions on OPEC members Venezuela and Iran, causing their oil exports to drop.
Saudi Energy Minister Khalid al-Falih, asked by reporters on Tuesday how sure he was about getting a nine-month extension of the output-cutting deal, said: “I am 100% confident.”
Fears about weaker global demand as a result of a U.S.-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries.
Prolonging the output pact is likely to anger U.S. President Donald Trump, who has demanded OPEC leader Saudi Arabia supply more oil and help reduce fuel prices if Riyadh wants US military support in its standoff with arch-rival Iran.
Brent was trading flat on Tuesday at around $65 per barrel after OPEC approved the supply-cut extension the previous day.
Monday’s OPEC meeting will be followed by talks with its allies on Tuesday. The gathering is due to start after 0800 GMT.
Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend the existing OPEC+ pact and continue to cut combined production by 1.2 million barrels per day, or 1.2% of world demand.
Oil prices could stall as a slowing global economy squeezes demand and U.S. oil floods the market, a Reuters’ poll of analysts found.
Saudi Arabia’s Falih said on Monday he was growing more positive about the global economy after a G20 meeting of world leaders over the weekend.
“The global economy in the second half of the year looks a lot better today than it did a week ago because of the agreement reached between President Trump and President Xi (Jinping) of China and the truce they have reached in their trade and the resumption of serious trade negotiations,” Falih said.
The meeting on Tuesday will also discuss a charter for long-term cooperation between OPEC and non-OPEC producers.
