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OPEC and allies will keep the oil production cuts through the end of 2018, and will discuss at their June meeting whether to extend those cuts further, Kuwait’s Oil Minister Bakheet al-Rashidi said on Monday.
While a possible extension will be discussed when OPEC and the Russia-led non-OPEC partners part of the deal meet in June, a decision would not be made until later in 2018, according to the Kuwaiti minister, who was speaking at an industry event today.
“The agreement will continue until the end of this year,” al-Rashidi said, adding that “it would depend on market conditions whether to extend this agreement beyond 2018 or to reach a permanent agreement between OPEC and non-OPEC to support market stability.”
At the same event, the Kuwait Oil and Gas Summit, OPEC Secretary General Mohammad Barkindo said that OECD commercial oil stocks—OPEC and allies’ official target in the deal—had dropped to less than 50 million barrels over the five-year average, compared to a surplus of some 340 million barrels back in 2014. The trend of drawing down inventories will continue in the next few months, Barkindo said.
Last week, the OPEC chief said that the oil market balance—based on the OECD five-year average—may be achieved in the second to third quarter this year, earlier than previously expected—at the end of 2018.
OPEC and partners will discuss an initial draft of a longer-term cooperation framework at their meeting in June, Barkindo said last week.
The latest OPEC estimates peg the OECD stocks at 43 million barrels above the five-year average as of end-February, while the International Energy Agency (IEA) said in its latest report that OECD commercial inventories were just 30 million barrels above the five-year average at end-February, and that it looks very much like OPEC is close to achieving its mission.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.