OPEC+ Extends Output Cuts

By Olesya Astakhova, Bozorgmehr Sharafedin and Alex Lawler
Tuesday, July 2, 2019

OPEC and its allies led by Russia agreed to extend oil output cuts until March 2020 on Tuesday, seeking to prop up the price of crude as the global economy weakens and U.S. production soars.

The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the United States, which has overtaken Russia and Saudi Arabia to become the world's top producer.

Asked by reporters whether agreement had been reached, Saudi Energy Minister Khalid al-Falih said: "Yes."

Benchmark Brent crude has climbed more than 25% so far this year after Washington tightened sanctions on OPEC members Venezuela and Iran, causing their oil exports to drop.

The approval of the pact extension on Tuesday follows a decision by OPEC producers the previous day.

Fears about weaker global demand as a result of a U.S.-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries.

Prolonging the output pact is likely to anger U.S. President Donald Trump, who has demanded OPEC leader Saudi Arabia supply more oil and help reduce fuel prices if Riyadh wants U.S. military support in its standoff with arch-rival Iran.

A jump in oil prices might lead to costlier gasoline, a key issue for Trump as he seeks re-election next year.

Brent was trading slightly weaker at just below $65 per barrel.

The OPEC+ extension comes after Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to prolong the pact and continue to cut combined production by 1.2 million barrels per day, or 1.2% of world demand.

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

Saudi Arabia's Falih said on Monday he was growing more positive about the global economy after a G20 meeting of world leaders over the weekend.

"The global economy in the second half of the year looks a lot better today than it did a week ago because of the agreement reached between President Trump and President Xi (Jinping) of China and the truce they have reached in their trade and the resumption of serious trade negotiations," Falih said.

The meeting on Tuesday also agreed on a charter for long-term cooperation between OPEC and non-OPEC producers.


(Additional reporting by Alex Lawler, Rania el Gamal, Ahmad Ghaddar, Shadia Nasralla and Vladimir Soldatkin; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

Categories: Activity Production South America Africa Middle East

Related Stories

Pharos Energy Kicks Off Drilling Campaign Offshore Vietnam

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

Vietsovpetro Brings BK-24 Oil Platform Online Two Months Early

Chinese Contractor Secures Offshore Oil and Gas ‘Mega Deal’ from QatarEnergy

CNOOC Brings Online Another Oil and Gas Project in South China Sea

Seatrium Signs FLNG Vessel Upgrade Deal for Golar LNG

Norwegian Oil Investment Will Peak in '25

Shelf Drilling Lands New Jack-Up Contract in Vietnam, Extends Egypt Deal

CNOOC Brings New Offshore Gas Field On Stream

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

Current News

Malaysia’s Petronas and Oman’s OQEP Strengthen Oil and Gas Ties

Southeast Asia’s 2GW Cross-Border Offshore Wind Scheme Targets 2034 Buildout

Pharos Energy Kicks Off Drilling Campaign Offshore Vietnam

Viridien to Shed More Light on Malaysia’s Offshore Oil and Gas Potential

US Pressure on India Could Propel Russia's Shadow Oil Exports

Energy Drilling’s EDrill-2 Rig Starts Ops for PTTEP in Gulf of Thailand

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

ABL Secures Rig Moving Assignment with India's ONGC

Pakistan, Türkiye Deepen Oil and Gas Ties with Offshore Indus-C Block Deal

Eni-Petronas Gas Joint Venture Up for Launch in 2026

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com