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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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OPEC Deal Could Be Extended Beyond March 2018

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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  • Citizen Oil on September 07 2017 said:
    Ask anyone if they'd like to work less and earn more and they'd be up for it. Reduce every suppliers output by 3% and make 50% more. Logical, right ? Unfortunately getting human beings to agree with each other is like herding cats. As long as humans are greedy and not trustworthy commodities will always be in a bear market. American E&P's bragging about 30% YOY production increases is the dumbest thing I've heard especially from people who are touted as bright.

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