Russia, Saudi agree to extend OPEC production cut deal

By Monitoring

Osaka, Japan: Russia and Saudi Arabia have agreed to extend a deal to keep oil production low owing to abundant world supplies, President Vladimir Putin said on Saturday.

"We will extend this deal, both Russia and Saudi Arabia. For how long? We will think about that. For six or nine months. It is possible that it could be up to nine months," Putin told reporters after a G20 summit in Osaka.

The Organization of Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, meet on July 1-2 to discuss the deal that involves curbing oil output by 1.2 million barrels per day (bpd). The pact expires after June 30.

Putin, speaking after talks with Saudi Crown Prince Mohammed bin Salman, said the deal would be extended in its current form and with the same volumes.

“As far as the length of the extension is concerned, we have yet to decide whether it will be six or nine months,” said Putin said, who met the crown prince on the sidelines of a G20 summit in Japan.

A nine-month extension would mean the deal runs out in March 2020.

The Organization of the Petroleum Exporting Countries, a cartel of 14 countries pumping one third of the world´s oil, is holding a high-stakes meeting in Vienna on Tuesday.

The meeting comes against a background of ample global crude supplies, according to both the cartel and the International Energy Agency (IEA).

The Paris-based IEA watchdog has cut its forecast for 2019 oil demand-growth for a second straight month and has also trimmed its second-quarter forecast.

Kirill Dmitriev, the chief executive of Russian Direct Investment Fund who helped design the OPEC-Russia deal, said the pact in place since 2017 has already lifted Russian budget revenues by more than 7 trillion roubles ($110 billion).

“The strategic partnership within OPEC+ has led to the stabilisation of oil markets and allows both to reduce and increase production depending on the market demand conditions, which contributes to the predictability and growth of investments in the industry,” Dmitriev said.

Benchmark Brent has climbed more than 25 percent since the start of the 2019. But prices could stall as a slowing global economy squeezes demand and U.S. crude floods the market.