Nigeria lucky again as OPEC extends oil output cut by 9 months

The 13 members of the Organisation of the Petroleum Exporting Countries (OPEC) held a meeting in Vienna on Thursday, their first since an agreement was reached on limiting their output of the commodity late past year. reports that the oil producers agreed in December to cut output by 1.8 million barrels per day for six months from January 1, 2017.

Khalid Al-Falih Minister of Energy, Industry and Mineral Resources and President of the OPEC Conference of Saudi Arabia speaks to journalists prior to the start of a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Thursday, May 25, 2017.

The producer group has been battling a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.

Brent crude in early trading fell 1.3 per cent to around $53 per barrel as market bulls were disappointed OPEC would not deepen the cuts or extend them by as long as 12 months.

OPEC's de facto leader, Saudi Arabia, and top non-OPEC producer Russian Federation have said cuts need to be extended to speed up market rebalancing and prevent oil prices from sliding back below $50 per barrel.

The group of major producers will maintain current cuts to output for nine months until March, Reuters reported, citing an unidentified Opec delegate.

"Less OPEC oil on the market enhances the opportunity for American energy to fill needs around the world, and will help us achieve energy dominance", Sitton said.

Ann-Louise Hittle, vice president at energy consultancy Wood Mackenzie said that the "decision in Vienna sends a signal of continued support for oil prices from OPEC which helps USA onshore drillers make plans" to further increase their production.

A preliminary deal among OPEC nations to extend the supply curbs by nine months would be put to representatives of non-OPEC producers later Thursday, an OPEC source said.

Falih said on Thursday that he was not anxious.

The kingdom has allied with Russian Federation in vowing to rebalance the market after the halving of oil prices since 2014 decimated the budgets of oil-dependent producers and upended the global energy industry.

The cuts are likely to also be implemented by a dozen non-members led by Russian Federation, which has reduced output in tandem with OPEC since January.

  • Zachary Reyes