OPEC deal may be extended until the end of the year

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UNITED STATES (VOP TODAY NEWS) — Saudi Arabia proposes to extend the OPEC + deal until the end of the year, while excluding the Iranian and Venezuelan factors from the analysis.

OPEC is discussing a proposal by Saudi Arabia to extend the deal to reduce oil production in the second half of 2019, this is the most discussed option, a source close to the cartel told reporters.

According to him, the deal is proposed to be extended with the same quotas or to slightly ease them.

Commenting on the taking into account the factors of sanctions against Iran and the situation with oil production in Venezuela, the source said: “We do not like to make decisions based on expectations, on what is still possible.”

“We did not see a large increase in buyers against the background of the Iranian situation,” he said.

Answering the question about the position of Russia, the source noted that the Ministers of Energy of Saudi Arabia and Russia are constantly exchanging opinions and the decision can only be coordinated.

He expressed the opinion that the decision could be made in April.

Commenting on the opportunity to decide on the fate of the deal, which is valid until the end of June, already in April, OPEC Secretary General Mohammed Barkindo told reporters that as early as December, it was decided to get together in April and decide how to behave ahead of the curve.

The interlocutor noted that, according to some estimates, the reduction of oil in Venezuela may amount to 0.5 million barrels per day and more.

BACKGROUND

The new OPEC + agreement, in which the cartel countries cut production by 800 thousand barrels per day and non-OPEC countries by 400 thousand barrels per day, was reached on December 7, 2018. The agreement was extended for six months with a possible revision in April 2019 year.

The Russian oil companies at the meeting held on March 1 at the Ministry of Energy, where an agreement on the reduction of oil production OPEC + was discussed, unanimously confirmed the fulfillment of obligations under the transaction in the first half of 2019, TASS reports. Plans for the second half of the year were not discussed, the head of LUKoil Vagit Alekperov told reporters on the sidelines of the industry conference CERAWeek, organized by IHS in Houston.

“This time at the meeting it was decided unanimously that the first half of the year was working as we had agreed, and we were fulfilling our obligations,” said Alekperov.

He noted that previously “there was a special opinion” among companies, recalling the letter of the head of “Rosneft” Igor Sechin to Russian President Vladimir Putin, in which Sechin criticized the OPEC + deal. However, this time the companies were unanimous, Alekperov added. The further fate of the agreement, which expires in July, has not yet been discussed. “It was decided that we’ll see after April. So far, only the first half of the year, the second half of the year hasn’t been seen yet,” said the head of LUKoil.

He added that LUKoil still maintains plans to increase oil production in 2019 by 1%.

Add, oil prices steadily keep above $ 66, and on Tuesday they rose above $ 77 per barrel at the moment. The quotes were supported by reports that Saudi Arabia continued to restrict the export of oil and petroleum products, while production in Venezuela declined sharply due to blackout.

In addition, on the side of the “bulls” have played a message about the decline in the forecast for production in the United States. This year, production is expected to be 12.3 million barrels per day, the Energy Information Administration reported.

This article is written and prepared by our foreign editors writing for VOP from different countries around the world – edited and published by VOP staff in our newsroom.

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