OPEC and allies set to extend oil supply cuts, prop up prices
OPEC and its allies led by Russia are set to extend oil output cuts until March 2020 on Tuesday to try to prop up the price of crude as the global economy weakens and U.S. production soars.
The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the United States, which has overtaken Russia and Saudi Arabia to become the world’s top producer.
Benchmark Brent crude has climbed more than 25% so far this year after Washington tightened sanctions on OPEC members Venezuela and Iran, causing their oil exports to drop.
But fears about weaker global demand as a result of a U.S.-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries.
Brent was trading flat on Tuesday at around $65 per barrel after OPEC approved the supply-cut extension the previous day.
Monday’s OPEC meeting will be followed by talks with its allies on Tuesday. The gathering is due to start after 0800 GMT.
Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend the existing OPEC+ pact and continue to cut combined production by 1.2 million barrels per day, or 1.2% of world demand.
Oil prices could stall as a slowing global economy squeezes demand and U.S. oil floods the market, a Reuters poll of analysts found.
Saudi Energy Minister Khalid al-Falih said on Monday he was growing more positive about the global economy after a G20 meeting of world leaders over the weekend.
“The global economy in the second half of the year looks a lot better today than it did a week ago because of the agreement reached between (the United States and China) and the truce they have reached in their trade and the resumption of serious trade negotiations,” Falih said.
The meeting on Tuesday will also discuss a charter for long-term cooperation between OPEC and non-OPEC producers.
Source: Reuters (Additional reporting by Alex Lawler, Rania el Gamal, Ahmad Ghaddar, Shadia Nasralla and Vladimir Soldatkin; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)