Saudis, Russia Commit To 9-Month Oil Cuts, Goldman Sees $57 Price

May 24, 2017, 04:46

Saudi Arabia's Energy Minister Khalid al-Falih (L) and Russia's Energy Minister Alexander Novak attend a joint briefing in Beijing, China May 15, 2017.

In December 2016, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices.

Oil prices surged on Monday (15 May), after Saudi Arabia and Russian Federation agreed to extend an agreement to cut output for a further nine months until March next year.

An extension of the cuts at already agreed-upon volumes is needed to reach the goal of paring world inventories to their five-year average, Kuwait's Oil Minister Issam Almarzooq said Tuesday in an emailed statement.

Brent crude oil gained 30 cents to touch $52.12 a barrel, while the USA light crude traded 25 cents higher at $49.10 against their last close, reported Reuters.

The statement comes ahead of Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna on May 25 when leaders of the member nations would consider extending output cuts agreed with 11 non-members including Russian Federation in December past year, Reuters added.

Ministers from OPEC and the non-OPEC countries meet to decide policy on May 25 in Vienna, and OPEC has also invited two small producers not involved in the original deal, Egypt and Turkmenistan, to attend.

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Prices are up by 2 per cent since the announcement of the planned extension on Monday, compared with an over 15 per cent jump in the two days following the announcement of the initial cut on November 30, 2016.

Moscow and Riyadh were the two most important players in this collection of petrostates, so it's not surprising to see Brent crude jump almost $1.50 in trading today.

Global benchmark Brent crude settled up 98 cents, or 1.9 percent, at $51.82 a barrel, having touched $52.63, the highest since April 21.

"Iraq is with the continuation of a reduction of oil production of OPEC nations and we will push in that direction", Abadi said in a news conference broadcast on state TV.

Another 3-5 countries might join the agreement on reducing oil production by OPEC countries and non-cartel exporter countries, he went on.

It didn't really work, so Opec and a few other producers cut production hoping to revive prices.

"At 96.17 million barrels per day, output stood 90,000 barrels per day below a year ago, even as non-OPEC returned to growth", said the report. U.S. oil output has jumped by more than 10 per cent since mid-2016 to over 9.3 million bpd.

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