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A draft agenda for next week’s meeting of OPEC’s energy ministers suggests the decision to extend the oil production cuts until the end of 2018 is all but made, at least as far as OPEC members are concerned.
Reuters reports that the agenda calls for just a three-hour meeting, which by OPEC standards is very short. If the meeting is to be so short, then all participants must already be on board with the extension, Reuters said.
Indeed, both the secretary-general of OPEC, Mohammed Barkindo, and Saudi Arabia’s Energy Minister Khalid al-Falih, have said in recent weeks that they are seeking to reach consensus among all OPEC members on the extension prior to the November 30 meeting.
However, this is only the first meeting due November 30. After that one, the OPEC ministers will meet with their non-OPEC partners. The biggest among these partners, Russia, has hinted that it may yet have to be convinced of the need for another extension.
Besides hints, Russia’s Economy Minister said earlier this week that the production cut deal was adversely affecting the country’s economy. “Because of the OPEC deal we have a negative direct impact from oil production, as well as indirect effects related to low investment activity due to production limits,” Maxim Oreshkin said.
Earlier reports have reinforced the doubt about Russia’s stance on the extension, but it seems most observers agree that there will be an extension—just maybe not one that is nine months long. Russian oil producers, according to these reports, are against a long extension because stronger oil prices will strengthen U.S. shale production, and that’s not something either OPEC or Russia would like to see happening.
Anything less than nine months, however, will likely have a negative impact on prices as traders have prepared for an extension that will last until the end of next year. This effect will likely be short-lived until the market adjusts and hails the continued production curbs.
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.