Published: Wed, July 03, 2019
Markets | By Erika Turner

Opec maintains oil production limit to ward off price crash

Opec maintains oil production limit to ward off price crash

The Organization of the Petroleum Exporting Countries and other producers such as Russian Federation, a group known as OPEC+, agreed on Tuesday to extend oil supply cuts until March 2020 as members overcame differences to try to prop up prices.

Russia, the second biggest global oil producer followed by number three Saudi Arabia, decided three years ago to hook up with OPEC to counter slumping oil prices.

OPEC + countries voted in favor of joining the OPEC decision to extend the oil output cut deal for nine months while maintaining the quota of the old agreement.

Members of the Organization of the Petroleum Exporting Countries (OPEC) should have unity among themselves, Iran's Oil Minister Bijan Zanganeh was quoted as saying on Monday, adding that Tehran backed cooperation with non-OPEC oil exporter states.

OPEC and its allies led by Russian Federation have been reducing oil output since 2017 to prevent prices from sliding amid soaring production from the United States, which has become the world's top producer this year ahead of Russian Federation and Saudi Arabia.

Saudi Arabia's Energy Minister, Khalid Al-Falih, said "we will not know for sure until tomorrow [Tuesday]" but that most countries "want nine months". "I am certain that non-OPEC members will adopt the recommendation of the JMMC for a nine-month extension".

"If there is disagreement within OPEC, then Russia-Saudi can not push or force through a decision", he told AFP. Brent crude traded 2.9% higher at $66.60 per barrel.

'If demand growth is even 1 million barrels per day I think we could easily be $75 (the price per barrel) if not slightly higher because the physical crude market is still tight'.

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A gauge of US factory activity fell for a third month in June.

"OPEC is going to die with these processes", he declared on Monday morning, before OPEC oil ministers met to effectively rubber-stamp a done deal, bemoaning the Russia-Saudi dominance of the group's affairs.

Consistent rise in oil prices, analysts say, is good for the implementation Nigeria's N8.91 trillion budget 2019.

"Trump has one interest - low oil prices".

OPEC+ ministers have been signing a charter for long-term cooperation during the opening session of Tuesday's meeting, said delegates.

U.S. crude oil output in April rose to a fresh monthly record of 12.16 million bpd, according to the U.S. Energy Information Administration, even though shale production growth likely peaked past year.

The group is likely to schedule its next meeting for December, according to Secretary-General Mohammad Barkindo, who also said he expects his term as secretary-general to be renewed beyond its expiry in August.

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