Continued cooperation to reduce production rises in oil prices

Oil prices rose on Monday, shortly after comments by Saudi Arabian officials that the agreement between both OPEC and non-OPEC oil producers to reduce production in an effort to boost the market and oil prices, will continue beyond 2018.

Saudi Arabia, the world’s largest oil exporter and the actual leader of the Organization of the Petroleum Exporting Countries, indicated that the two major oil producers agree on the need for continued cooperation on the production reduction agreement after 2018, when the current agreement will expire.

Brent futures rose by 20 cents, or 0.3%, from the closing price of the last trading session, trading at $68.81 a barrel. On January 15, Brent hit its highest level since December 2014, at $70.37 a barrel. The prices of futures contracts for crude oil WTI rose by 18 cents, or 0.3%, reaching $63.55 a barrel.

“There is a willingness to continue cooperation even after 2018, and the mechanism has not yet been determined, but there is a consensus of continuing.”, Saudi Energy Minister Khalid al-Falih said. A group of top oil producers in the OPEC, together with Russia, have began to cut production levels in January 2017, as an attempt to boost oil prices. The agreement is scheduled to run until the end of 2018.

The decline in oil drilling activity in the United States to increase support for oil prices, Hughes Energy Services said last Friday: “Drillers cut five oil rigs in the week to Jan. 19, bringing the total count down to 747.

In a related context, according to the Organization of Petroleum Exporting Countries (OPEC), the next Joint OPEC-Non-OPEC meeting will be held in April, in Saudi Arabia. She added that the compliance in regards to the production cut agreement by OPEC countries and non-members amounted to 129% in December, compared to 107% on average over the past year.

Saudi Energy Minister Khalid al-Falih urged global producers on Wednesday to continue to cooperate even after 2018, but stated that this could mean a new deal, rather than continuing the same cut in production that has supported prices in recent months.