OPEC agreed on Thursday to extend cuts in oil output by nine months to March 2018, OPEC delegates told Reuters.
This comes as the producer group battles a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
The cuts are likely to be shared again by a dozen non-members led by top oil producer Russia, which reduced output in tandem with the Organization of the Petroleum Exporting Countries from January.
OPEC’s cuts have helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues.
Energy minister of OPEC member AlgeriaNoureddine Boutarfa said ahead of the meeting he expected extending the cuts to nine months as this would help reduce the global supply by the end of 2017 and increase prices of the crude to more than USD55 per barrel.
Boutarfa added that states showed no objection to the nine months extension. “We can’t say six months then add three others. This sends a wrong message to the market,” he stated.
Algerian energy minister attributed this extension to the normal weak demand in the beginning of every year.
Kuwait also announced on Wednesday that OPEC and independent producers might extend oil output for a year or increase it during the meeting in Vienna.
UAE Energy Minister Suhail bin Mohammed al-Mazroui said on Wednesday ahead of the Vienna meeting that his country was ready to support either a six or a nine-month extension to an oil output cut agreement provided that it is supported by a majority.
Speaking in an interview on the Abu Dhabi-based Sky News Arabia, Mazroui also said the UAE expected full compliance with any deal reached at an oil producers meeting in Vienna.”We believe that conditions are suitable for an understanding about the reduction because the cut in the previous period had had a positive impact on the market,” Mazroui said.
A source in OPEC said that the ministerial committee recommended that the oil outcome cut remains at its current levels.