OPEC, Non-OPEC meeting extends oil production cuts to end of 2018

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A lengthy OPEC Conference meeting in Vienna was followed by confirmation from OPEC Conference president Khalid Al-Falih that production cuts – both from OPEC and non-OPEC nations – would be extended from January to December 2018.

This followed a previously agreement that OPEC members would cut production by 1.2million barrels a day and non-OPEC participating nations Azerbaijan, Bahrain, Brunei Darussalam, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and Sudan would tighten their spigots by 558 000 barrels a day, until March 2018.

The latest agreement extends this deal to the end of 2018.

Khalid Al-Falih, Saudi Energy Minister, and the President of the OPEC Conference announced the decision and commented: “The decision has been unanimous. It is a solid decision many of you have been urging us to make.”

“We will replicate our level of commitment the same as in 2017… I am going to be breathing down the necks of other 24 countries making sure their stay the course.”

Al Falih said United States shale oil was a reality.

“Not only is it a fact, but within certain limits it’s welcome because growth in demand 1.5 million (boed) year after year after year, with 3-5 million barrels annually of decline from mature basins – North Sea, Mexico, China, and in many OPEC producing countries – that decline needs to be offset.”

“We don’t believe shale nearly can carry that load.”

He did not elaborate on what price would stabilise the market and create a sound investment platform.

“Prices are to be determined by markets. They will oscillate, and finally, they will find a balance that brings supply and demand into balance.

“When prices were too high, supply exceeded demand, and if prices are too low, as they have been in the last couple of years, you can easily project that supply will be short in a few years, as a decline takes place and demand rises very fast.

“What is the range that will bring the balance? We will discover that in the next two to three years.”

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