Oil prices surges on Monday following Saudi Arabian and Russian energy ministers’ decision of extending the Organization of the Petroleum Exporting Countries’ (OPEC) output deal for an additional nine months.
Global benchmark Brent crude futures lifted 3.1 percent to $52 a barrel the highest level in two weeks while US marker crude West Texas Intermediate (WTI) edged up 3.2 percent to $49.
The gains will present some relief subsequent to what has been a dull few weeks for a lot of commodities in the course of US President Donald Trump’s effort to get his infrastructure plan started and tightening credit in China.
Energy ministers Khalid Al-Falih (Saudi) and Alexander Novak (Russia) met on Monday in Beijing and talked about the oil output policy.
Russia is the world’s largest oil manufacturer while Saudi Arabia is the major exporter.
Both ministers said in a shared statement that they have agreed that supply cuts needs to carry on to 2018, an act towards keeping the OPEC-led deal so as to hold up prices in place longer than the initially decided optional six-month extension.
The Saudi Arabian minister also said that there has been a noticeable drop to the inventories but they are not where they want to be in meeting the five-year average.
For this reason, they have come to the decision that the deal has to be extended.
The ministers suggested that next round of cuts should be on the same conditions like the previous agreement where OPEC, Russia and other producers settled to cut production by 1.8 million barrels per day in the first half of 2017 with a possible six-month extension.
Khalid-Al-Falih told the reports that OPEC countries and non-OPEC countries taking part in the agreement on cutting oil outputs has accomplished a complete consent on extending the contract.
He added that he thinks that the verdicts will be positive in Vienna and that they bring together a full agreement of the group.
Based on the joint statement of Saudi Arabia and Russia, they have agreed to discuss with the countries-parties in the deal and other producers ahead of May 24 so as to achieve a complete consent on the nine- month extension of the declaration on cooperation.
Both countries are planning to suggest the nine-month extension at the meeting which will take place on May 25.
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