OPEC plans to extend oil production cuts by 9 months

OPEC and its allies agreed on extending oil cuts for nine more months, after many members of the producer group have endorsed a policy aimed at boosting oil prices amid a weak global economy.

Saudi Energy Minister Khalid al-Faleh said most OPEC members would like to extend the deal for nine months. The deal is now subject to approval by non-OPEC allies at a meeting on Tuesday, as the Iraqi oil minister said he did not expect any complications.

Earlier in the day, Iranian Oil Minister Bijan Zanganeh told reporters he had “no problem” in supporting a nine-month supply cut. Tehran, OPEC’s third largest producer before the re-imposing of US sanctions, had previously objected to Saudi Arabia’s policies.

“It will be an easy meeting because my position is very clear,” Zangane told reporters in Vienna, Austria. OPEC is due to discuss extension of oil production cuts during its meeting on Monday, ahead of a deal backed by other states such as Russia on Tuesday.

The producer group and its allies have reduced oil production since 2017 to prevent falling prices amid rising output from the United States – which has become the world’s largest producer this, year before Russia and Saudi Arabia. The United States is not a member of OPEC and does not participate in the agreement. Washington has asked Riyadh to pump more oil to compensate for a drop in exports from Iran after new sanctions have been imposed on Tehran over its nuclear program.

Oil prices rose sharply as Brent crude traded at $66.28 a barrel, up 2.4%. At the same time, US crude futures reached $59.95 a barrel, up 2.5%.

In a statement to reporters in Vienna on Sunday, Energy and Industry Minister Suhail al-Mazroui said the extension of the deal reached in December last year, which called for a 1.2 million bpd reduction in production,

“In my opinion, the current market situation will require an extension,” Mazrouei said. The production cut-off agreement expired on Sunday. His remarks came after Russian President Vladimir Putin announced during the weekend that Russia had reached an agreement with Saudi Arabia to extend the oil production agreement for six to nine months.

“We will support the extension, both Russia and Saudi Arabia,” said Putin, who met Crown Prince Mohammed bin Salman at the G-20 summit in Japan, said. “With regard to the length of the extension, we have not yet decided whether it will be six or nine months, perhaps nine months.” Saudi Energy Minister Khalid al-Falih said on Sunday it was likely to extend the deal for nine months and no more cuts were needed.

Asked about the possible extension of the G20 summit rather than the meeting of OPEC and its allies, Al Mazroui said: “OPEC … is an organization that can veto any resolution, so every vote is important.”

OPEC is about to collapse

Iran’s oil minister criticized “unilateralism” among some members of the alliance, warning that it could eventually lead to the collapse of the organization. Speaking to reporters in Vienna on Monday, Zanjana said: “The important thing for me is that OPEC remains OPEC, it has lost its authority and is about to collapse.” “Iran will not leave OPEC, but I think OPEC will die if these operations continue,” Zanjana said, referring to the Russian-Saudi resolution. “Tehran will not support a long-term cooperation pact between OPEC and the external parties that are supposed to be agreed upon this week,” he said.

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