Saudi Arabia and Russia announced that they might extend oil production cuts into 2018.
In two different statements made on Monday, the world’s biggest oil producers announced they might consider extending their productivity reductions for longer than the six-month extension that is expected to be made at the OPEC meeting on May 25.
“We are discussing a number of scenarios and believe extension for a longer period will help speed up market rebalancing – Russian Energy Minister Alexander Novak announced in a statement.
His Saudi counterpart Khalid Al-Falih said earlier in Kuala Lumpur that he was “rather confident the agreement will be extended into the second half of the year and possibly beyond” after negotiations with other nations taking part in the accord. Oil grew briefly after Novak’s words, but later lost its profits to trade 0.8 percent lower at $48.73 a barrel at 1:51 p.m. in London.
Russia and Saudi Arabia are reaffirming their commitment to the deal amid growing doubts about its effectiveness. Surging U.S. production has made the OPEC and partners fall to reduce their oversupply. Oil has lost most of its profits since their deal late last year.
“The producer coalition is determined to do whatever it takes to achieve our target of bringing stock levels back to the five-year average,” Al-Falih mentioned.
While U.S. shale output growth and the shutdown of refineries for maintenance have stopped the impact of reductions by OPEC and its partners, the Saudi minister said he’s pretty sure the global oil market will soon balance back and return to a “healthy state.”
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