OPEC Extends Oil Output Cut By 9 Months

OPEC Extends Oil Output Cut By 9 Months

A delegate from one of the cartel's member nations said the cuts are likely to be shared by countries from outside the price-fixing group, according to Reuters.

With over a dozen other countries expected to join the cartel's efforts, the agreement is likely to cut off about 2% of the world's oil supply through March 2018, extending a decision the OPEC-led coalition reached past year.

Africa's third-biggest oil producer, Equatorial Guinea, has been accepted as a new member of the Organisation of the Petroleum Exporting Countries.

The new agreement means that the reductions of 1.8 million barrels a day agreed on last November will stay in place until March 2018.

A joint committee of ministers from OPEC and non-OPEC oil producers will continue to gather every two months in order to monitor the markets, the Russian minister said, adding that the intergovernmental body can meet even more frequently if needed. Opec sources have said the Thursday meeting will highlight a need for long-term cooperation with non-Opec producers.

The International Energy Agency, which advises rich countries on oil policy, said earlier this month that OPEC has a "financial motivation to extend the supply cuts".

Oil markets remained weak on Friday after tumbling in the previous session when OPEC and allied producers extended output cuts but disappointed investors betting on longer or larger supply curbs.

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Wood Mackenzie's forecast followed speculation Tuesday from Kuwaiti Oil Minister Essam al-Marzouq, who said "all options are on the table" to balance the market, but a "remarkable leap in prices" was not expected for the rest of 2017.

OPEC is painfully aware of its diminishing power to influence the market as shale producers gain more clout.

The global glut of supply has proved hard to draw down even after OPEC agreed to cut production in the first half of the year.

Brent crude dropped by $2.60, to $51.36 a barrel, while West Texas Intermediate dropped by $2.58, to $48.78 a barrel.

The Opec also faces the dilemma of not pushing oil prices too high because doing so would further spur shale production in the United States, the world's top oil consumer, which now rivals Saudi Arabia and Russian Federation as the world's biggest producer.

As markets have been expecting the current output limit to be extended, benchmark prices for European and United States oil did not rise on Thursday but fell to USD53.24 and USD50.56 per barrel respectively.

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