VIENNA, Brent crude is currently up 0.4% at US$63.3 a barrel, as OPEC and non-OPEC members agreed today in Vienna to extend their output curbs until the end of 2018. But West Texas Intermediate - the US benchmark - has slipped 0.5% to $57 a barrel.
Saudi Energy Minister Khalid al-Falih confirmed earlier today that the agreement on curbing output will be extended. He said, the decision has been unanimous.
He added at a press conference after the OPEC ministerial meeting here today that inventories were expected to decline to the desired targets in the second half of 2018.
"We don't expect supply surprises in 2018 as we saw in 2017. But supply from other regions remains unknown, especially Shale producers from the US. We will be agile and respond as events unfold," he stated.
He said that OPEC has "come a long way" in the last year towards rebalancing the oil market, but "a lot more needs to be done".
Al-Falih urges members to stick together, rather than bowing to the temptation to pump more oil than is permitted under the output cuts deal.
"History says that as you get closer to the goal, commitment wavers. I call on you all to stay the course, rather than relying on others."
In the long term, oil producers must invest in new infrastructure to ensure oil production in the future, he added.
"Fundamentally, the cuts have worked well," Patrick Pouyanne, Chief executive officer of French oil major Total SA, said at a press briefing in Antwerp. "I'm not surprised they decided to extend."
In the meantime, Russia has expressed concerns that an extension for the whole of 2018 could prompt a spike in crude production in the United States, which is not participating in the deal.
"If producers in the U.S. increase their rig count over the next few months due to higher prices then I expect another price collapse by the end of 2018," said Scott Sheffield, Executive Chairman of Pioneer Natural Resources Co, one of the largest producers in the Permian Basin of Texas and New Mexico, the largest U.S. oilfield.
"I hope that all U.S. shale companies will maintain their current rig counts and use all excess cash flow to increase dividends back to their shareholders," he told Reuters.
Kuwaiti Oil Minister Essam al-Marzouq told reporters following it has been 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.
Source: Emirates News Agency