- Clifford Beaumont: OPEC and members to extend production cuts in effort to end global supply glut.
Clifford Beaumont: OPEC and members to extend production cuts in effort to end global supply glut.
OPEC and other non OPEC oil producers seem ready to reach an agreement at this week’s meeting to prolong production restrictions until the end of next year.
An analyst at Taipei, Taiwan based Clifford Beaumont stated that the OPEC (Organization of the Petroleum Exporting Countries) group and its allies hope to end a worldwide supply glut of crude oil by extending the production cuts and thereby avoiding another price crash.
A final discussion regarding the language of the anticipated statement is expected as Russia seeks clarification on the terms of the end of the cuts in an effort to prevent the market from overheating should the deficit end too suddenly.
The Clifford Beaumont analyst said that the producers’ existing agreement expires in March of next year. Under this agreement, producers are reducing supply by approximately 1.8 million barrels per day (bpd) in an effort to improve oil prices.
An OPEC delegate suggested that it is likely the producers will agree on a period of 9 months for the extended production cuts.
Clifford Beaumont analysts believe that there will be no surprises at the meeting as all members are in favor of nine months.
Russia and the 14-member OPEC cartel have indicated that they may reassess any extension of the agreement when they convene again in June of next year if the market overheats.
With crude prices increasing to more $60 per barrel, Russia has voiced concerns that prolonging the production cuts could cause a spike in crude output in the United States, which is not part of the agreement.