Oil futures rose after Opec and other major producers agreed to extend their production curbs till the end of 2018, aimed at ending a persistent glut in global supplies.
Opec and non-Opec oil producers led by Russia have agreed to extend oil production cuts until the end of 2018, while pledging full conformity to the agreed output adjustments.
At a meeting in Vienna, they also signalled a possible early exit from the deal if the market overheats.
"In view of the uncertainties associated mainly with supply and, to some extent, demand growth it is intended that in June 2018, the opportunity of further adjustment actions will be considered based on prevailing market conditions and the progress achieved towards re-balancing of the oil market at that time," a statement said.
The producers’ current deal, under which they are cutting supply by about 1.8 million barrels per day (bpd) in an effort to boost oil prices, was to expire in March, a report said.
Russia, which this year reduced production significantly with Opec for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival US shale firms don’t boost output further, it said.
Russia needs much lower oil prices to balance its budget than Opec’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude.
Saudi Energy Minister Khalid al-Falih told Opec and non-Opec allies had agreed to extend the cuts by nine months until the end of 2018, as largely anticipated by the market.
Opec also decided to cap the combined output of Nigeria and Libya at 2017 levels below 2.8 million bpd. Both countries have been exempt from cuts due to unrest and lower-than-normal production.
Al-Falih said it was premature to talk about exiting the cuts at least for a couple of quarters as the world was entering a season of low winter demand. He added that Opec would examine progress at its next regular meeting in June.
"When we get to an exit, we are going to do it very gradually ... to make sure we don’t shock the market,” he said.