Will OPEC Announce Extension of Output Cuts in its Month-End Meeting?

SEATTLE (Oil Monster): What are the chances that the upcoming Organization of Petroleum Exporting Countries (OPEC) meet may extend production cut through the end of March 2018? Despite opposition from Russian companies, President Vladimir Putin has extended support for the extension. The Saudi Energy Minister Khalid Al-Falih too has urged the meet to announce extension to output curbs.

Russia doesn’t believe that it is necessary to announce a decision on extension in the Nov 30 meeting. However, President Putin announced that the pact between OPEC countries, Russia and other countries, now due to expire in March 2018, must be extended to the end of 2018. Meantime, the other members seem to be quite hesitant on whether it would be feasible to make a formal announcement regarding the announcement this early.

Minister Khalid Al-Falih stated that the world would continue to have oil surplus by end-March next year. There are very less chances for supply and demand in international oil market to rebalance by that time. The October data could provide a better indication, he said. Hence extension of some sort would be necessary. The announcement of possible extension of deadline would give more clarity to the market, Al-Falih said. Further, he noted that the Saudi administration is currently in consultations with OPEC members as well as non-OPEC countries.

Meantime, oil markets edged higher Thursday on hopes of announcement on production cuts at the Nov 30 meeting.