OPEC and its allies will continue to cut oil supplies at the same level in the first quarter of 2020, according to Prussian Energy Information. The actual leaders of the producer alliance, Khalid al-falih, Saudi energy minister, and Alexander Novak, Russia, have agreed to extend the oil cuts for longer than previously announced.
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OPEC and non-OPEC cuts of 1.2 million barrels per day expire on Sunday. Oil demand growth forecasts and U.S. production surge, and many ministers support an extension to prevent further price falls. The alliance will meet in Vienna on Monday and Tuesday to decide how to proceed.
Arriving in Austria’s capital, Falkh said that the oil cuts are most likely to be extended by nine months, but the specific time will be for talks with other ministers. In addition, he said that the number of cuts should remain unchanged and there was no need for further cuts, as some countries, such as Algeria and Iraq, had suggested. Despite the slowdown in demand growth, demand for more than 1 million barrels a day is healthy and the market will remain balanced in six to nine months.
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Nowak said it was difficult to increase production because of bad weather conditions in Russia. The most likely and beneficial way for the season to affect demand is to extend trading for nine months. In addition, the removal of contaminated Russian crude oil from the Druzhiba pipeline may also enter autumn, affecting production.
Much of the discussion around the agreement revolves around the extension before the end of the year. Russian President Vladimir Putin met with Saudi Crown Prince Mohammed Bin Salman at the G20 summit in Japan on Saturday, and announced that the two countries had agreed on expanding cuts. After that, he proposed for the first time the possibility of a nine-month agreement.
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