(Bloomberg) -- OPEC and its allies were close to an agreement to extend their oil-production cuts for another nine months as they seek to prop up prices and revive their economies.
While ministers gathering in Vienna were set to discuss other options -- a shorter deal for six months or curbs lasting for the whole of next year -- consensus was building around an agreement that runs through March 2018. The most influential participants in the deal, including Russia, Saudi Arabia and Iraq, have publicly backed supply curbs of that duration while Iran said it would go along with whatever the majority agrees.
"I think we almost all agree on nine months,” Algeria’s Energy Minister Noureddine Boutarfa said in an interview in Vienna on Wednesday. Nobody is opposed to the plan, but some nations had reservations, he said.
The Organization of Petroleum Exporting Countries and 11 non-members agreed last year to cut output by as much as 1.8 million barrels a day. The supply reductions were initially intended to last six months from January, but the slower-than-expected decline in surplus fuel inventories prompted the group to consider an extension. U.S. crude futures have rebounded by about 13 percent from a five-month low since Saudi Arabia first proposed maintaining the curbs into 2018.
A committee of six OPEC and non-OPEC nations charged with ensuring successful implementation of the cuts is meeting in Vienna on Wednesday to study the merits of a 12-month extension, in addition to the six and nine-month durations already discussed publicly, Kuwait’s Oil Minister Issam Almarzooq told reporters in Vienna.
Venezuela, Russia, Saudi Arabia and Algeria -- also members of the committee -- have said they favor an extension through March 2018. Oman, the sixth country on the panel, is not opposed to nine months but wants more discussion before giving its support, Oil and Gas Ministry Undersecretary Selim Aloufi said in an interview in Vienna Tuesday.
You can follow our TOPLive blog on the OPEC meeting in Vienna on Thursday here.
Kazakhstan may present the biggest complication to talks in the Austrian capital on Thursday. The third-largest non-OPEC participant in the agreement pumped 1.76 million barrels a day in April, overshooting its target of 1.68 million, OPEC estimates show. The country’s Energy Minister Kanat Bozumbayev said he will seek to renegotiate the cap on its output before agreeing to an extended deal.
OPEC and its allies will probably agree to prolong their agreement until the end of the first quarter of 2018, Gary Ross, global head of oil at PIRA Energy Group, part of S&P Global Inc., said in an interview in Vienna on Wednesday.
The crude market is now starting to rebalance in earnest, but it will take time and the bulk of stockpile draws will come between June and September, Ross said. OPEC will achieve its stated aim of bringing fuel inventories back in line with the five-year average by the end of this year, said Venezuelan Oil Minister Nelson Martinez.