OPEC, allies set to agree oil cut extension to end of
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[November 30, 2017]
By Alex Lawler, Rania El Gamal and Shadia Nasralla
VIENNA (Reuters) - OPEC and non-OPEC oil
producers look poised to agree on Thursday to extend output cuts until
the end of 2018 to finish clearing a global glut of crude while
signaling they could exit the deal earlier if the market overheats.
Non-OPEC Russia, which this year reduced production significantly with
OPEC for the first time, has been pushing for a clear message on how to
exit the cuts so the market doesn't flip into a deficit too soon.
The producers' current deal, under which they are cutting supply by
about 1.8 million barrels per day (bpd) in an effort to boost oil
prices, expires in March.
Before the 14-country OPEC's meeting started at around 1100 GMT in
Vienna, Saudi Energy Minister Khalid al-Falih said he favored extending
cuts by nine months until the end of 2018.
He said it was premature to talk about exiting the cuts at least for
couple of quarters and added that OPEC would examine progress at its
next meeting in June.
"When we get to an exit, we are going to do it very gradually ... to
make sure we donít shock the market," he said.
The Iraqi, Iranian and Angolan oil ministers also said a review of the
current deal was possible at the next OPEC meeting in June in case the
market becomes too tight.
International benchmark Brent crude <LCOc1> rose more than 1 percent on
Thursday to above $64 per barrel.
As of 1300 GMT, the meeting of the Organization of the Petroleum
Exporting Countries had been running for around two hours. It will be
followed by a gathering of OPEC and non-OPEC producers led by Russia,
scheduled for after 1400 GMT.
CAPPING NIGERIA, LIBYA
With oil prices rising above $60, Russia has expressed concerns that
such an extension could prompt a spike in crude production in the United
States, which is not participating in the deal.
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Iran's Oil Minister Bijan Zanganeh talks to journalists at the
beginning of an OPEC meeting in Vienna, Austria, November 30, 2017.
Russia needs much lower oil prices to balance its budget than OPEC's leader
Saudi Arabia, which is preparing a stock market listing for national energy
champion Aramco next year and would hence benefit from pricier crude.
"Prices will be well supported in December with a large global stock draw. The
market could surprise to the upside with even $70 per barrel for Brent not out
of the question if there is an unexpected interruption in supply," said Gary
Ross, a veteran OPEC watcher and founder of Pira consultancy.
Kuwaiti Oil Minister Essam al-Marzouq said OPEC would debate capping Nigerian
and Libyan output at 1.8 million bpd and 1 million bpd respectively, having
exempted the two countries so far due to unrest and lower-than-normal
The production cuts have been in place since the start of 2017 and helped halve
an excess of global oil stocks although those remain at 140 million barrels
above the five-year average, according to OPEC.
Russia has signaled it wants to understand better how producers will exit from
the cuts as it needs to provide guidance to its private and state energy
"It is important ... to work out a strategy which we will follow from April
2018," Russian Energy Minister Alexander Novak said on Wednesday.
(Additional reporting by Ernest Scheyder, Ahmad Ghaddar and Vladimir Soldatkin;
Writing by Dmitry Zhdannikov; Editing by Dale Hudson)
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