Russia and Saudi Arabia have agreed to extend a major oil output-cutting deal by six to nine months to help support the market, Russian President Vladimir Putin said Saturday after meeting Saudi Crown Prince Mohammed bin Salman.
The Organization of the Petroleum Exporting Countries (Opec) and its Russia-led allies agreed to a six-month round of output cuts in December that lifted oil prices by as much as 22% by April.
But recent Middle East tensions that threaten oil supplies have been offset by worries about the global economy, sending oil prices into a tailspin that is nearing a bear market.
“We have agreed that we will extend our deal,” stated Putin, cited by Russian news agency Interfax, after meeting the Saudi Crown Prince on the sidelines of the G-20 leaders’ meeting in Osaka.
Putin said the length of the extension is up to discussion but it would be between six and nine months.
Opec’s 14 member-nations and a group of 10 oil-producing countries led by Russia are gathering Monday and Tuesday for a high-stakes meeting in Vienna to discuss the production deal. Some OPEC member nations expected to argue for deeper curbs than previously agreed, The Wall Street Journal has reported.
But Putin said Moscow and Riyadh support an extension at current volumes, which run at around 1.2 million barrels a day.
“In any case, we will support the extension of the agreement, both Russia and Saudi Arabia, in the amount approved earlier,” Putin said.
Russian energy minister Alexander Novak said Saturday that a nine-month extension would be preferable due to oil demand seasonality.
“We believe it would be more appropriate to undergo the winter season as part of the agreement as well... because it is difficult to withdraw from a deal in winter, when demand plummets, and in summer demand rises,” Novak said, according to Interfax.
