OPEC and partners officially ratify the New Deal
Russia and the other non-OPEC members of the production charter first sealed in 2016 have officially ratified an extension of the last cut in the cut that was adopted in December, said energy minister Alexander Novak at the OPEC meeting in Vienna today, having made the details of the agreement one day earlier.
CNBC reported that OPEC had agreed to extend cuts ̵[ads1]1; in total 1.2 million bpd – until the end of March 2020 when prices nested to rise much above the US $ 60-65 band.
The news comes on the heels of previous reports that Russia, Saudi Arabia and Iraq have also joined a extension of the cuts Iran has also agreed to the expansion yesterday despite the increasing internal split in the oil-exporting cartel.
The decision to expand the cuts is not very surprising, with relentlessly rising US oil production, OPEC has few go They pull again, if any. Russia has repeatedly noted that it would be happy with lower oil prices than its Middle Eastern partners, yet it has once agreed to continue cutting. Some saw in this a deal, where Middle Eastern partners – especially Saudi Arabia – would compensate Moscow for the disadvantage of having to sell less oil with investment contracts in energy and other sectors.
However, this compensation cannot eliminate the risk that Rosneft requires its own compensation for production restrictions: Igor Sechin, last month, said the company would seek such compensation from the Kremlin if it agreed to support an extension of the cuts.
What is perhaps more worrying about OPEC is that oil prices responded weakly to the news: Reuters reported earlier today Brent and WTI had both withdrawn from the lead following the first announcement of the cutback agreement, pressured by traders, worried about the prospects for the world economy in connection with the US Chinese trade war.
By writing, Brent crude traded at $ 64.87 per barrel and West Texas Intermediate traded at $ 58.91 per barrel,
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! function (19659000)] by Irina Slav for Oilprice.com
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