OPEC seeking consensus on oil supply cut extension

London : Oil producers are working to build consensus on extending their deal to reduce supplies, OPEC’s secretary general said yesterday, with the potential for continuation throughout 2018 forming a basis for talks.

The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers, are cutting oil output by about 1.8 million barrels per day (bpd) until March 2018 in an attempt to eradicate a supply glut that has weighed on prices.

The deal has supported prices, which are trading within sight of a two-year high, but an overhang of stored oil has yet to be fully eradicated and producers are considering extending the deal at their next meeting on Nov. 30.

OPEC Secretary General Mohammad Barkindo, in a briefing with reporters yesterday, said that Russian President Vladimir Putin’s suggestion this month that the deal could be extended to the end of 2018 were being taken “seriously”.

Saudi Energy Minister Khalid al-Falih, the OPEC president, and Russian Energy Minister Alexander Novak “are taking cue from the open statement of President Putin and engaging the rest of the participating countries ... to build consensus before Nov. 30”, Barkindo said.

Reuters reported on Wednesday, citing OPEC sources, that producers are leaning towards extending the deal for a further nine months, though the decision could be postponed until early next year depending on the market.

Barkindo said it wasn’t yet clear if the decision would be made on Nov.30 and, asked whether another meeting could be held in early 2018, said that Falih and Novak would consult and decide.

“It’s difficult to say at the moment what will be decided in November,” Barkindo said.

“It will depend on a number of factors, chief among which is how far are we from achieving our objective of a convergence of supply and
demand.”

Falih and Novak are also talking to producers not currently participating in the supply cut, Barkindo added.