Oil producer nations ready to restrict output to lift crude prices
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OIL producer nations looked set yesterday to keep a lid on output in an attempt to push crude prices higher, but with signs Russia is starting to get cold feet.
Oil ministers from within and outside OPEC at talks in Vienna indicated that the 24 producers would extend an agreement struck in 2016 by nine months until the end of 2018.
“Everybody’s working toward that nine-month extension,” Nigerian Petroleum Minister Emmanuel Kachikwu said in a Bloomberg television interview.
Currently the accord — which excludes the United States — curbs output by 1.8 million barrels per day and is due to expire on March 31.
The agreement among the 14 members of the Organization of the Petroleum Exporting Countrie and 10 other nations including Russia was struck a year ago and extended earlier this year.
The aim was to reduce a vast global excess in supply that had pushed oil prices down to a 13-year low of under US$30 a barrel in early 2016 from more than US$100 in 2014.
While helping consumers, the low price wreaked havoc with the finances of oil producing nations, prompting belt-tightening even in super-rich Saudi Arabia and other Gulf nations.
It starved OPEC member Venezuela of sorely needed foreign currency, exacerbating a dire economic crisis that has pushed it to the brink of a full-blown debt default.
While of little help to Caracas, where oil output is on course to hit a near 30-year low in 2018, the accord has eventually managed to lift the price of crude.
Oil prices are now at a two-year high, with Brent Crude close to US$65 per barrel and fellow benchmark West Texas Intermediate recovering to over US$60.
They fell back slightly in recent days but then gained a bit yesterday, with Brent up 55 cents at US$63.66 in London.
The huge amounts of oil sitting in storage worldwide have also fallen to more normal levels.
The situation has been helped by improved economic conditions, notably in energy-hungry China, boosting demand for crude.
Saudi Arabia and other members of OPEC, including Iraq, have made it clear they want the deal to stay in place.
“In the coming months our job will continue. The job is not done,” Khaled al-Falih, Saudi Arabia’s energy minister, said on Wednesday.
A joint OPEC and non-OPEC committee on Wednesday recommended that the cuts be kept in place.
Kuwait’s Oil Minister Issam Almarzooq yesterday the committee had recommended a nine-month extension.
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