Published: Tue, July 02, 2019
Money | By Ethel Goodwin

OPEC Set for 9-Month Oil Cut Extension

OPEC Set for 9-Month Oil Cut Extension

Russia has agreed with Saudi Arabia to extend the deal with OPEC on reducing oil output, Russian President Vladimir Putin said, as oil prices come under renewed pressure from rising U.S. supplies and a slowing global economy.

The group is facing a weaker demand outlook due to slowing global growth.

Oil prices surged upwards in anticipation of an extension of production cuts by Opec+, as the alliance led by Saudi Arabia and Russian Federation is known.

Meanwhile, the United States - emphatically not a member of OPEC - has been increasing oil production at a rapid clip. Brent gained 2.81 per cent and was trading at $66.56 per barrel at 11.22am UAE time.

"Without unity among members of OPEC, it is meaningless to plan cooperation between OPEC and non-OPEC countries", the Oil Ministry's website SHANA quoted Zanganeh as saying before leaving Tehran to attend an OPEC meeting in Vienna.

The verbal agreement between Putin and Crown Prince Mohammed at the G20 further highlights the importance of the gathering as a key policymaking forum for oil and OPEC watchers. Bijan Namdar Zanganeh, the Iranian oil minister, is scheduled to arrive in Vienna for talks with fellow members on Monday morning.

Riyadh and Moscow ended years of animosity in 2016, joining forces to manage the global oil market in an effort to prop up prices.

Ministers of OPEC states gathered in Vienna on Monday to discuss the fate of the deal, before they are joined by ministers from non-OPEC countries on Tuesday.

Saudi Arabia argues that oil supplies are sufficient, pointing to rising stockpiles despite significant output reduction in sanctions-hit Iran and Venezuela.

Speaking last week, the United States special envoy for Iran said Washington will sanction any country that imports Iranian oil, without exception.

Saudi Arabia and Russian Federation sealed the deal on the extension of cuts on the sidelines of the G20 meeting in Osaka on Saturday. "We're pretty much in a stalemate situation with the continued rise of USA production".

Oil prices could stall as a slowing global economy squeezes demand and USA oil floods the market, a Reuters poll of analysts found.

Saudi Arabia has also unilaterally made deeper curbs, pumping 9.73 million barrels a day in June, according to a Bloomberg survey of officials, analysts and ship-tracking data. He warned that oil-demand growth had "softened a little bit", but said there wasn't a need to deepen the cuts.

Ministers from the 14-nation Organization of the Petroleum Exporting Countries (Opec) met in Vienna to discuss output, before gathering a day later for Opec+ - which is a grouping of 24 oil-producing countries that includes Russian Federation and together accounts for nearly half of global crude.

Tensions are near a boiling point, with recent reports suggesting that President Trump called off a military strike on Iran "at the last minute", after Tehran shot down a U.S. drone.

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