Iraq Could Extend the Output Cut Deal to December 2018
Output cut deal
OPEC and non-OPEC producers agreed to cut crude oil production by 1.8 MMbpd (million barrels per day) from January 2017 to March 2018. The output cut deal would reduce global crude oil inventories and support crude oil prices. However, Brent and US crude oil (UWT) (DWT) prices have fallen 5.6% and 12% year-to-date.
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According to Reuters, an OPEC meeting is scheduled on September 22, 2017. The meeting will focus on whether major oil producers should consider longer or deeper cuts. Nigeria and Libya are expected to attend the meeting. Both of the countries were exempt from the output cut deal.
On September 10, Saudi Arabia’s energy minister discussed a possible extension of a production cut deal beyond March 2018 with Venezuela and Kazakhstan. Russia is also interested in extending the production cut deal.
The output cut deal expires in March 2018. Some traders think that crude oil production from OPEC and Russia would rise after the output cut deal expires. So, major producers should extend the output cut deal. Iraq suggested that the output cut deal could be extended for at least three months.
OPEC’s next official meeting is on November 30, 2017. The meeting could officially declare whether or not the output cut deal will be extended. Any extension of the output cut deal is bullish for crude oil prices.
In the next part of this series, we’ll look at how the global crude oil supply outage impacts crude oil prices.