Extension of OPEC deal remains uncertain

Extension of OPEC deal remains uncertain

Elisa Maria Giannetto
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Rumors surrounding talks to extend the OPEC output cut for another six months have already begun to proliferate. The official meeting will be held in Vienna on 25 May

It feels like we’re back in late November again, when the world held its breath awaiting the outcome of the OPEC deal to cut oil production and push up prices. Just like six months ago, these days will prove decisive to establishing whether the deal will be extended or not. Today the Algerian energy minister Noureddine Bouterfa is on an official visit to Iraq in order to discuss the possibility of extending the cuts. The Saudis and Russians are themselves determined to halt the price drop. Putin will guarantee his support to Saudi Arabia, creating a "holy alliance" of the two heaviest hitters of 24 oil-producing countries behind the deal. Russian energy minister Alexander Novak has recently told reporters that Moscow is willing to extend the deal beyond 2017. Meanwhile, Reuters reports that Saudi Aramco intends to cut supplies to Asia by 7 million barrels in June, the equivalent of two days’ worth of oil shipments to Japan. Brent has been showing signs of recovery in recent weeks, although it has not broken $50 a barrel. This rally is mainly due to the American Petroleum Institute’s forecast last week that US inventories would fall by 5.8 million barrels. Should this prediction be confirmed by the US Department of Energy, it would provide a much sunnier outlook than others expecting a 1.8 million barrel drop. Already in late April US drilling had reached the historic high of August 2015 of nearly 9.3 million bpd. The official meeting of OPEC and non-OPEC countries that have signed on to the output cut will be held in Vienna on 25 May, to be preceded by the usual round of informal talks and tentative deals.