Members of the Organisation of the Petroleum Exporting Countries have agreed to extend production cuts for nine months, according to media reports, citing a delegate at the highly anticipated meeting in Vienna. OPEC decided to extend cuts in oil output by nine months to March 2018, OPEC delegates said, as the producer group battles a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.
The cuts are likely to be shared again by a dozen non-members led by top oil producer Russia, which reduced output in tandem with the Organisation of the Petroleum Exporting Countries from January. OPEC’s cuts have helped push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets.
However, Nigerian Oil Minister Emmanuel Ibe Kachikwu said that conceptually Nigeria was not opposed to joining OPEC production caps but would have to wait and see if production came back to acceptable levels.
“We are targeting that by the end of the extension period we are trying to prep and finalise repairs of our infrastructure and at that time we would be able to join,” he said.
“We have to wait and see that the militancy effects are out and the infrastructure is rebuilt and we’re back to production,” he said.
OPEC and non-OPEC oil producers are gearing up to extend output cuts possibly by as long as 12 months, to help clear a global inventory overhang and to support crude prices.
The OPEC ministers will discuss the production accord with a group of non-cartel members later and are expected to hold a joint press conference at 5 p.m. local time. A coalition of 24 major oil producers in November agreed to cut production by a collective 1.8 million barrels a day in an effort to reduce global oil supply and boost prices.
Traders had widely expected the OPEC ministers to agree on a nine-month extension, but there was also some hope that they would deepen the cuts. In the absence of any deeper cuts, oil prices tumbled after reports of the agreement. Crude oil fell 1.8% to $50.41 a barrel, while Brent lost 1.6% to $50.42.
