OPEC considers extending output cuts as oil cartel faces slackening demand

Khalid Al-Falih, Minister of Energy, Industry and Mineral Resources of Saudi Arabia arrives for a meeting of the Organization of the Petroleum Exporting Countries at their headquarters in Vienna, Austria, Monday, July 1, 2019 | Associated Press photo by Ronald Zak, St. George News

VIENNA (AP) — OPEC looked set to extend its current deal to cut production for nine months as the oil cartel faces a weakening outlook for demand because of waning global growth.

Member country representatives were meeting Monday at the Organization of the Petroleum Exporting Countries’ headquarters in Vienna and will hold talks with nonmember producing states on Tuesday.

Several key representatives said group members were falling into line behind a nine-month, as opposed to a six-month, extension. Saudi Arabia’s Energy Minister Khalid Al-Falih said “we will not know for sure until tomorrow” but that most countries “want nine months.”

Iraq’s oil minister Thamir Ghadhban said nine months was “mostly likely.”

The official rollover of the full deal is dependent on both OPEC and non-OPEC countries agreeing.

Iraq’s Minister of Oil, Thamir Abbas Al Ghadhban, arrives for a meeting of the Organization of the Petroleum Exporting Countries at their headquarters in Vienna, Austria, Monday, July 1, 2019 | Associated Press photo by Ronald Zak, St. George News

The current deal to support prices reduced production by 1.2 million barrels per day starting from Jan. 1 for six months. Most of the cuts came from OPEC nations, who agreed to cut 800,000 barrels per day, with the rest of the cuts coming from Russia and other countries. The cuts were designed to put upward pressure on the price of oil.

But since December’s decision to cut production, conditions in the oil market have become increasingly complex, making a decision over an extension less clear.

“It’s a much harder market to forecast,” said Amy Myers Jaffe, senior fellow at the Council for Foreign Relations. “I’m of a confused mind, and I think many participants are.”

Geopolitical turmoil and production problems in various markets have led to concern that oil supply would be tight, conditions which tend to push the price of oil higher.

To some degree, those opposing forces have counter-balanced each other, but dueling dynamics make it difficult to predict what’s likely to happen with the price of oil, and that may make decisions for OPEC leaders challenging.

Written by KIYOKO METZLER and CATHY BUSSEWITZ, Associated Press. Cathy Bussewitz contributed from New York. Associated Press writers Anthony Mills contributed from Vienna. Associated Press business writer David McHugh contributed from Frankfurt.

Email: news@stgnews.com

Twitter: @STGnews

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Free News Delivery by Email

Would you like to have the day's news stories delivered right to your inbox every evening? Enter your email below to start!