Russia supports Saudi call to extend oil output cut

Saudi Arabia expects to extend until the end of 2017 the OPEC-led deal struck at the beginning of the year which cut oil output.

Saudi Arabia’s energy minister Khalid Al-Falih said today that oil markets were rebalancing after years of oversupply, but that he still expected an OPEC-led deal to cut output during the first half of the year to be extended to the end of 2017.

The Organisation of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, and other producers including Russia, pledged to cut output by 1.8 million barrels per day (bpd) during the first half of the year to prop up the market.

Read: Oil producing countries set to extend oil output cut by 6 months

Reuters reported the minster, who was speaking at an industry event in Kuala Lumpur as saying: “Based on consultations that I’ve had with participating members, I am confident the agreement will be extended into the second half of the year and possibly beyond.”

Meanwhile Russia has said it supported extending the deal. The country’s energy ministry said in a statement today:

We are discussing a number of scenarios and believe extension for a longer period will help speed up market rebalancing. Russia expresses its full solidarity with the efforts of our partners aimed at rebalancing the global oil market and believes that joint efforts to date have been very effective.

Russia and Saudi Arabia, the largest of the 24 nations that agreed to cut production, are said to be reaffirming their commitment to the deal amid growing doubts about its effectiveness. Surging US production has raised concern that OPEC and its partners are failing to reduce an oversupply. Ministers will meet again in Vienna on 25 May to make the final decision on any extension.

Read: Saudi King orders 35% drop in taxes for oil firms