Saudi Arabia and Russia have agreed that OPEC and non-OPEC allies should announce an extension of the cuts at the highly anticipated meeting in Vienna on November 30, news reports have suggested.
Recent reports on discussions between OPEC and non-OPEC members had it that Saudi Arabia was pushing for an announcement of the cuts extension next week in Vienna, while Russia was more hesitant about telling the market on November 30 how the participants in the deal would act. Russia appeared to be stalling and playing for an announcement to be issued closer to the current expiration deadline of the deal, March 2018.
According to Bloomberg, Russia and Saudi Arabia have now agreed on the need to announce some sort of a deal next week, but Russia has insisted on additional phrasing in the extension deal that would link the size of the cuts to the state of the oil market.
While OPEC and Russia have agreed on a general framework, discussions are still on about how OPEC could meet Russia’s demands, including how to include a link between the size of the cuts and the state of the rebalancing of the oil market. There are also discussions about including an option to review the pact again in early 2018, including calling a new meeting, Bloomberg reported.
As of last week, not all Russian oil companies were on board with extending the cuts. Almost 50 per cent of the global oil oversupply has been erased and Brent prices had risen to an “acceptable enough” level of more than $60 a barrel. Details will be discussed at the Vienna meeting at the end of this month.
Russia’s economy was negatively affected in October by the ongoing curbs, which saw Moscow agree to cut output by 300,000 bpd, Economy Minister Maxim Oreshkin said on Nov. 23.
Goldman Sachs said the outcome of the meeting was “much more uncertain than usual”, adding that there was a high probability of a nine-month extension. Consultancy Wood Mackenzie said it looked as if producers would extend cuts until the end of next year.