The Organization of the Petroleum Exporting Countries (OPEC) on Thursday agreed to extend until March 2018 an oil output cut agreement put in place for six months effective from January 1 and will expire in June, Iranian media reported.
Iranian channel Press TV reported that the decision of the 13-nation cartel that includes Iran and Saudi Arabia, to extend the cuts for 9 months would effectively lower OPEC’s production by 1.8 million barrels per day.
“We fully support nine months…it will have more impact on market stability and prices. It will have more benefit in 9 months and we think it is a period that will have more stability in the market,” Press TV quoted Iraqi Petroleum Minister Jabbar Ali Hussein Al-Luiebi as telling reporters following the OPEC meeting here.
Non-OPEC producers led by Russia, which are participating in the current output cut, also agreed here to join the extension till next March.
According to Press TV, Iranian Oil Minister Bijan Zanganeh said on the sidelines of the meeting that Iran, which has been exempted from the ongoing output cut deal, would continue producing at its existing level.
Nigeria and Libya would also be exempted from the cuts as their output has remained curbed by disturbed conditions internally.
Following the meeting, Saudi Arabian Energy Minister Khalid al-Falih lauded OPEC’s consensus over the output cut.
“We do have consensus. My job has been very easy. There is great solidarity among members…I think everybody sees the benefits and everybody appreciates this collective action,” Falih said.
Last week, Saudi Arabia and Russia agreed on the need to prolong the current agreement on cuts.
In early December, oil producers outside OPEC, led by Russia, agreed to reduce output by 558,000 barrels per day (bpd). This came in the wake of the OPEC’s November 30 decision to cut output by 1.2 million bpd for six months effective from January 1.
This is the first time since 2001 that OPEC and some of its rivals had reached a deal to jointly reduce output to tackle the global oil glut.
Oil prices had earlier fallen by more than 50 per cent in less than two years, from levels of over $120 a barrel.
The Indian basket, comprising 73 per cent sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, closed trade on Wednesday at $53.28 for a barrel of 159 litres, which was higher than the previous day’s close at $52.64.