November 30, 2017
OPEC and non-OPEC oil producers have agreed to extend oil output cuts until the end of next year, according to news media sources at a regular oil cartel meeting in Vienna.
Saudi Oil Minister Khalid Al Falih predicted a global rise in demand for oil, largely from the developing world, that will buy the product of growing production from the shale oil industry.
He also predicted “healthy inventory drawdowns” by the second or third quarter of 2018.
Oil prices remained steady as the meeting concluded Thursday.
The aim will be to finish clearing a global glut of crude while signaling a possible early exit from the deal if the market overheats, Reuters reported Thursday afternoon.
But oil ministers agreed to a new provision to review the market efficiency of the production cuts at the June 2018 OPEC meeting, according to Bloomberg.
Russia has reduced production significantly this year, but is looking for a way out of an agreement to cut production, and needs lower prices to balance its budget.
Saudi Arabia is looking for cuts in production to continue next year with hope that prices can increase by the time a stock market listing for Aramco is ready; such a listing would then benefit from higher oil prices, Forbesnoted Thursday.
The extension was the outcome that al Falih wanted and the provision to review was clearly a concession to Russian oil minister Alexander Novak‘s position.
Also: The United Arab Emirates oil minister commented that OPEC is looking for other countries outside the cartel to join in the crude output cuts.