OPEC’s Giants Declare Support For New Deal

OPEC

July 1, 2019//-After weeks of speculation, it’s official: Russia, Saudi Arabia, and Iraq have declared their support for an extension to the oil production cuts OPEC and its partners agreed last December to regulate global supply and prices.

Reuters reported Russia’s President Vladimir Putin had announced the latest update ahead of the OPEC meeting beginning today in Vienna, saying Russia had agreed with Saudi Arabia to extend the cuts by six to nine months. The cuts total 1.2 million bpd, of which OPEC is supposed to cut 800,000 bpd.

However, with U.S. sanctions against Venezuela and Iran have reduced OPEC’s total supply by a lot less: energy data provider Kayross said earlier this month the overhang was as much as 90 million barrels above the average for 2018.

Some saw in this a deal, in which the Middle Eastern partners—notably Saudi Arabia—would compensate Moscow for the inconvenience of having to sell less oil with investment contracts in energy and other sectors.

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