Economy

Oil firms as OPEC+ poised to extend supply cut

Oil firms as OPEC+ poised to extend supply cut

Meanwhile, Russia reduced oil production in June by more than the amount agreed in a global deal to cut output, the energy minister and industry sources said on Monday, as the sector still felt the impact of a contaminated crude crisis that crippled exports.

Leaders from Russian Federation and Saudi Arabia say the so-called OPEC+ group has agreed to extend by six to nine months a deal to reduce oil output in an effort to bolster global crude prices in the face of a potential economic slowdown. However, the minister believes that the markets would not need any deeper cuts after that.

During the meeting, the two sides talked about the status of OPEC and stressed the fact that no country could impose decisions on OPEC from outside.

"The reason for extending the deal by nine months instead of six is to assure the markets that the deal will remain in place through the seasonally soft demand period in the first quarter of 2020", said Amrita Sen, co-founder of Energy Aspects. Saudi Arabia and Russian Federation are the largest members in the group and are usually able to steer the alliance toward their preferred strategy.

Opec is set to extend production cuts into next year as the oil cartel attempts to offset record United States supply and dwindling global demand.

"If Russia, Saudi Arabia and other key OPEC members keep production at the levels they produced in H1-19, they will ensure that the global oil market is not flowing over".

Front-month Brent crude futures for September touched an intra-day high of $66.14 a barrel and were up 89 cents, or 1.4 per cent, at $65.63 a barrel by 1117 GMT.

OPEC, a group of 14 countries pumping one-third of the world's oil, is holding a high-stakes meeting in Vienna on Tuesday.

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In case the Islamic Republic joins the OPEC plan to extend the current output restrictions, its share will decrease and it will not be easily recoverable.

Opec and its oil-producer allies decided in December to trim daily crude output by 1.2 million barrels.

In this regard, he warned of the possibility that Washington is designing new coercive measures to affect oil suppliers in middle and long-term, and OPEC's missions as regulating organization for balanced global economy.

Russian President Vladimir Putin said on Saturday he had agreed with Riyadh to prolong existing output cuts.

Iran is on board with an output cut extension by Opec and its allies for the second half of the year, according to the country's petroleum minister, despite denouncing what he termed the alliance's "unilateralism".

Speaking last week, the U.S. special envoy for Iran said Washington will sanction any country that imports Iranian oil, without exception. "It is critical that we don't make hasty decisions, given the conflictive data, the complexity of all and the evolving situation", Falih said at the last JMMC meeting in Jeddah.

Mr Zanganeh said Iran would give its approval to an extension regardless of whether it was for six months or nine.