AS expected, OPEC and a large group of Non-OPEC supporting countries have agreed to continue their push to stablise oil prices by continuing to restrict production from their respective countries.
In an overnight gathering in Vienna, Ministers from OPEC Member Countries met with their counterparts from non-OPEC oil producing countries with an agreement reached to extend production cut-backs for a further nine months – commencing from July 1.
In announcing the decision, the 14 OPEC Member Countries and 10 participating non-OPEC producing countries highlighted the importance of continuing efforts to help stabilise the oil market, in the interests of all oil producers and consumers.
The OPEC and the participating non-OPEC countries also agreed to continue to regularly review the status of their cooperation at the technical and ministerial levels, and further agreed to continue to strengthen their cooperation, including facilitating the exchange of joint analyses and outlooks, with a view to ensuring a sustainable oil market for the benefit of producers, consumers, the industry and the global economy.
Commenting on the agreement to rollover production curbs for nine months through to the first quarter of 2018, Ann-Louise Hittle, Wood Mackenzie’s vice president, Research Macro Oils, said OPEC’s decision is a “big one” because it shows a commitment to support oil prices into 2018 – and potentially for all of next year.
“A the firmer oil price will, we expect, further support the US tight oil industry into 2018. Today’s decision in Vienna sends a signal of continued support for oil prices from OPEC which helps US onshore drillers make plans,” Ms Hittle said.
“The extension through to the first quarter of 2018 makes it clear to the oil market that OPEC intends to continue to support oil prices at the expense of market share, at for the time being.
“For 2017, the OPEC decision today does not make a large difference to our oil price forecast. Our view since January has been that cuts would be extended through end 2017, and that fundamentals tighten in the second half of 2017.”
Despite the positive move, oil prices have fallen sharply in early trade.