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Saudi Arabia, Russia agree on extending oil cut until March 2018

by ChemOrbis Editorial Team - content@chemorbis.com
  • 16/05/2017 (10:07)
According to media reports, Saudi Arabia and Russia announced on May 15 that they agreed on extending the oil cut deal for nine more months until March 2018. However, the deal extension has not yet been finalized as all 12 members of OPEC have to agree in the group’s meeting that will be held on May 25 in Vienna in order for the deal to be officially extended.

The announcement was immediately reflected on crude oil prices on Monday with NYMEX rising $1.01 to settle at $48.85/bbl and Brent increasing 98 cents to settle at $51.82/bbl on Monday. Both crude futures are trading above the latest settlements as of Tuesday morning. The rise upon the two countries’ announcement equals 2% when compared to the 15% rise following the initial cut decision made on November 30, 2016.

The extension of OPEC’s production cut agreement is considered highly likely. However, doubts remain that a possible extension might not work to keep global crude oil stocks and prices in balance as the US signals it will increase its production and Iran is planning to raise its daily production to 5.7 million barrels.
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