The crude oil production cut deal that OPEC, Russia, and several other producers agreed to late last year could get yet another extension. This extension would push the deal beyond the March 31, 2018 end date that was agreed earlier this year, according to Russia's Energy Minister Alexander Novak, speaking to news agency TASS.
Novak said he had discussed another extension with his Saudi counterpart, Khalid al-Falih, at a meeting in Saint Petersburg earlier this year, noting that all options are on the table and no decisions have been made yet.
The official's comments helped to boost oil prices today, especially as they came on the heels of comments from Iran's Oil Minister, Bijan Zanganeh, who said Monday that compliance with the cuts among OPEC members was improving and the market was returning to balance. Media also quoted Zanganeh as saying discussions on the future of the deal were ongoing.
Russia's Energy Minister has been consistently guarded in his comments regarding the deal ever since the idea was floated last year. We're unlikely to see anything more specific than such guarded comments, suggestions, and speculation until OPEC's next meeting, due to take place in November. Related: How EIA Guestimates Keep Oil Prices Subdued
Since the deal was sealed in November 2016, Brent crude has accumulated gains of about 6 percent and WTI has added 13 percent, CNBC notes. This recovery has been unsteady, to say the least, as compliance levels among the participants in the deal continue to be a cause for concern and the main headwind, U.S. shale output growth, persists.
Demand, however, seems to be improving, which is lending some support to OPEC and its partners. The chances of the deal getting extended will likely remain hard to gauge in the coming months. On the one hand, OPEC's de facto leader Saudi Arabia has demonstrated more than once that it is prepared to go to great lengths to support prices, but at some point, Saudi Arabia's commitment to do whatever it takes could involve a loss of market share that is difficult to live with, especially as U.S. crude starts flowing into Asia, taking up OPEC territory.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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