An extension of future oil cuts by 9 months is almost a certainty as the Organization of Petroleum Exporting Countries meet in Vienna on Thursday to discuss extending the six month contract.
Saudi Arabia, OPEC’s top producer is in favor of cutting output by not only 6 months but by 9. Khalid Al-Falih, Saudi Energy Minister has reportedly won the support of Iraq, the second biggest oil producer in OPEC for a nine month extension. This would go through to the first quarter of 2018.
The original deal that OPEC reached in their meeting last year in December which included non-OPEC members of which Russia is a part of was to cut oil output production by 1.8 million barrels per day for a six month period.
US Shale Producers
Hampering the global glut of over-supply is the US shale producers, who have been adding new rigs on a weekly basis as they have found ways to produce oil at low costs. OPEC’s deal has managed to keep prices of oil at the $50 per barrel, boosting the fiscal major oil producers.
Harry Tchilinguirian, commodities strategist at BNP Paribas’s said that there is a strong consensus which has not been seen for some time, going into an OPEC meeting. He said that it may take more than an extension as oil cuts have only made a modest impact.
US to Sell Off Oil Reserves
News reports from the US, reveal that the Trump administration have plans to sell a portion of their strategic oil reserves over a 10-year period, in an effort to reduce US debt levels
Brent crude rose 13 cents at $54.00 a barrel.
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