The 14-member group OPEC, Russia and nine other producers are currently cutting production by around 1.8 million barrels per day until March 2018, and on Thursday oil ministers are in Vienna to discuss a possible extension to this deal.
Industry analysts covering OPEC in the Austrian capital still widely expect OPEC to prolong cuts until the end of 2018. However, while efforts to clear a global supply overhang are projected to continue, a deal may also be agreed for a shorter time frame – like three or six months – or it could be for nine months with more emphasis on reviews.
Iraq’s Oil Minister Jabar al-Luaibi told CNBC Wednesday that any such caveat would be unnecessary.
When asked whether OPEC’s second-largest producer was supportive of a mid-stream review in either the first or second quarter of 2018, Al-Luaibi replied: “No, no. The existing declaration (will) finish at the end of March. So we extend this another nine months, so that means it will end by the end of 2018.”
The somewhat rocky road to reaching an agreement by Thursday’s OPEC meeting has also exposed some cracks in the new world order of oil – where Saudi Arabia and Russia use their combined heft to influence prices and global supply. The cause of those “cracks” in the new ‘R-OPEC’ appears to be U.S. shale oil which has become a competitor to OPEC, Russia and other oil producers.
But Nigeria’s Energy Minister Emmanuel Ibe Kachikwu said Wednesday that OPEC and Russia were not in danger of an alliance breakdown on Thursday. Asked explicitly whether OPEC members are in agreement, but Russia is not aligned with OPEC, he said, “No, we’re all aligned.”
OPEC plans to hold an open session, with media, from around 9 a.m. London time before going into a closed session at midday, according to a tentative schedule on OPEC’s website. Non-OPEC members are set to join at around 3 p.m., with a joint press conference to follow proceedings.
Brent crude traded at around $63.43 on Thursday morning, up 0.51 percent, while U.S. crude was trading at $57.42, up 0.21 percent.
The price of oil collapsed from near $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production. OPEC’s reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil-producing nations — in late 2016.
The exporters reached the current deal last November and have already extended the agreement once through March 2018.
— CNBC’s Patti Domm contributed to this report.
OPEC, Russia on track to announce deal extension but there could be caveats