LONDON (Reuters) – The fog may be cleared in advance of OPEC’s next policy meeting by Saudi Arabia and Russia declaring their support for extending a major international deal to take oil supplies for an additional nine months, OPEC’s secretary general told Reuters on Friday.
The Organization in the Petroleum Exporting Countries, plus Russia and nine other producers, have cut output by about 1.8 million barrels per day (bpd) to lose a supply glut. The pact runs to March 2018 and they’re considering extending it.
Saudi Arabia’s Crown Prince Mohammad bin Salman said immediately he is at favor of extending the term in the agreement for nine months, following on from similar remarks by Russian made by President Vladimir Putin on Oct 4.
“OPEC welcomes the clear guidance from your crown prince of Saudi Arabia over the should achieve stable oil markets and sustain it past the first quarter of 2018,” OPEC’s Mohammad Barkindo told Reuters on the sidelines of the conference.
“Along with the statement expressed by President Putin this clears the fog to be able to Vienna on Nov. 30.”
“It’s advantageous to acquire this high-level feedback and guidance,” Barkindo added, when asked if the crown prince’s comments suggested a nine-month extension with the pact looked more inclined.
Reuters reported on Oct. 18, citing OPEC sources, that producers were leaning towards extending the deal for nine months, although the decision may just be postponed until early buy according to the market.
Discussions are continuing inside run-up on the Nov. 30 meeting, which oil ministers from OPEC and the participating non-OPEC countries will attend.
The deal has supported the oil price, which on Friday reached $59.91 a barrel, the very best level since July 2019, but a backlog of stored oil has not over-tired and costs are at half the quality of mid-2019.
The supply pact targets reducing oil stocks in OECD industrialized countries with their five-year average, as well as the latest figures suggest producers are equally over midway there.
Stock levels in September stood at about 160 million barrels above that average, depending on OPEC data, down from January’s 340 million barrels through the five-year average.
