OPEC and non-member oil producers are considering extending their output cut deal by nine months or more to avoid a glut in Q1 2018, amid expectations for seasonal weak demand, Reuters reported on Monday, citing unnamed sources familiar with the matter.
The cartel’s Arabian Gulf producers are discussing whether an extension of nine months or longer is necessary to give the market more time to rebalance.
"To increase production in those months may have a negative impact (on prices). So we may ask for an extension until the end of Q1 of 2018," a source said.
Saudi Arabia’s energy minister, Khalid Al-Falih, said on Monday that the production could be extended beyond 2017.
In December, OPEC agreed with 11 non-member producers, led by Russia, to cut production by a combined 1.8 million barrels per day for a period of six months starting Jan. 1, 2017.
The deal was part of efforts to rebalance the market and boost oil prices, which have more than halved since late-2014.
The producer group and other countries involved in the deal are expected to arrive at a decision on extending production cuts at OPEC’s upcoming meeting in Vienna on May 25.
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