Oil producers agree to extend supply cuts

The world’s biggest oil producers have agreed to extend a deal to curb oil production throughout 2018 to shrink swollen stockpiles and keep prices above $60 a barrel.

Saudi Arabia and Russia, whose combined production makes up a fifth of global supplies, have together led an effort by 24 countries inside and outside the Opec cartel to curb global production by 1.8 million barrels next year. If an agreement had not been reached on Thursday, the deal was set to expire in March.

“By agreeing a nine month extension this shows a serious commitment from Saudi Arabia and Russia to keep pushing down inventories while propping up the price,” said Jason Schenker at Prestige Economics.

20 million barrels

The agreement means Saudi Arabia and Russia - whose output totals more than 20 million barrels a day - have stood by a deal sealed by Russian president Vladimir Putin and King Salman last year, and which has dominated crude markets for the past 18 months.

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Ahead of the meeting, Russia, the largest oil producer outside Opec, had been at odds with other members over how long to extend the deal, which first came into effect in January. But Thursday’s agreement shows a line has been drawn a line under their differences.

The deal is likely to be reassessed in the middle of next year when Opec has its next scheduled meeting.

– Copyright The Financial Times Limited 2017