14 nation Organization of Petroleum Exporting Countries (OPEC) and its allies looking to extend oil supply cuts to next week, at least until end of 2019, as the Iraq joined the top producers Saudi Arabia and also Russia on Sunday, in endorsing a policy meant at propping up price of crude amid a sluggish global economy. The oil prices saw upward movement on Monday, surged more than $1 a barrel on July 1, 2019 after the Saudi Arabia, Iraq and Russia backed the idea of an extension of supply cuts, and that demand is for another six to nine months, ahead of an upcoming meeting of OPEC in Vienna.
On Saturday, Russian President Vladimir Putin said that he had agreed with Saudi Arabia for the extension of existing output cuts of 1.2 million barrels per day, or about 1.2% of global demand, that is for six to nine months until December 2019 or March 2020.
Khalid al-Falih, who is Saudi Energy Minister, said that the deal would most likely to stretched by nine months, and for that there is no need for any deeper reductions.
“It’s a rollover and it’s happening,” Falih, whose country is the de facto leader of OPEC, told reporters.
The head of commodities strategy, Warren Patterson at Dutch bank said that the OPEC had more to lose in this, if not agreed to extend the deal.
“It comes down largely to fiscal breakeven oil prices – the Saudis have a breakeven price of around $85 per barrel, and so they will be concerned about potentially a widening gap between this level and where the market trades,” he said.
The Benchmark Brent crude has rose more than 25% since 2019 started to $65 per barrel. But the oil prices could stall, in wake of the slowing global economy, the demand squeezes and also impacted the U.S. oil floods the market, a Reuters poll of analysts found.