OPEC Extend Oil Cut Production

OPEC Extend Oil Cut Production

It looks like OPEC will continue to extend production cuts through the end of the year. This decision was made after a meeting with Russia took place. Ministers from each respective country voiced concerns about the impact of slowing down global oil economy on oils prices and the benefits of cooperation amongst them.

With a unified front they presented on June 6 it shows their division might have been resolved. Members and non-OPEC members are still to agree and commits on the production volumes. A final date has not been agreed to discuss the issue with follow ministers.

don’t think the question is at all whether we will extend or not,” Saudi Energy Minister Khalid Al-Falih said after a panel at the St. Petersburg International Economic Forum chaired by Bloomberg TV. “A rollover is almost in the bag for OPEC. The question is to calibrate with non-OPEC if there needs to be an adjustment from the first half.”

Diverging interests and surging market volatility are making the ministers’ decisions more difficult. Oil is torn between the bearish influence of U.S.-instigated trade wars and the bullish threat of supply disruptions from Iran to Venezuela.

“I don’t think there will be a need to deepen the cut, but whether we need to scale it back a little bit will depend on what happens in Iran, Venezuela, other countries,” Al-Falih said.”

Barrel cost is currently below $60/bbl since January.

The biggest drivers are now sanctions, tariff wars” and they cannot be predicted, Russian Energy Minister Alexander Novak said. “The situation in the market is far from being a positive one” and demand growth may slow to below 1 MMbpd, so the OPEC+ deal “is a very great instrument for dealing with this uncertainty.”

OPEC is planning on meeting to further the conversation and hopefully come out of it with an agreement for both members and non-members.