Saudi Arabia’s OPEC governor said on Friday there is an emerging consensus among OPEC and non-OPEC countries who took part in a global pact to cut crude output on the need to extend the agreement beyond June to help clear a supply glut.
OPEC, Russia and other producers have agreed to curb production by 1.8 million barrels per day (bpd) until June 30.
“There’s an emerging consensus among participating countries on the need to extend the production agreement reached last year” Adeeb Al-Aama told Reuters.
“Based on today’s data, there’s a growing conviction that a six-month extension may be needed to rebalance the market, but the length of the extension is not firm yet,” he said.
A formal decision will be taken when the OPEC ministers meet on May 25.
NAN reports that on April 19, OPEC Secretary-General Mohammad Barkindo said that all oil producers taking part in a supply-cut pact are committed to bringing global inventories down to the industry’s five year average and restoring stability to the market.
Barkindo, speaking in the United Arab Emirates, said compliance data in March is showing better conformity by the oil producers with the agreement than in February.
OPEC and non-OPEC producers agreed in December to cut supplies for six months, helping lift oil prices to about 55 dollars a barrel after a two-year slump.
OPEC will review policy for the second half of this year at a May 25 meeting.
Barkindo would not say whether the agreement will be extended for another six months, but that any decision taken would be in the interest of all producing and consuming countries.
NAN reports that on Dec. 10, 2016, OPEC won the backing of countries outside the oil cartel to join supply cuts for the first time since 2001, overcoming the final major obstacle for a global agreement to curb output.
The agreement in Vienna was designed to speed the end of the worst oil downturn in a generation by mopping up excess supplies and boost prices, providing some relief to resource-rich nations whose economies have taken a big hit.
Prices rallied by 15 per cent since Nov. 30, 2016 when Opec’s 13 members led by the group’s largest producer Saudi Arabia, agreed to curb output by more than one million barrels a day.