Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries agreed to extend their oil production cut further nine months to the end of 2018 on Thursday.
The decision came as the previous cuts helped the oil prices to recover from the levels of $27 per barrel in January 2016 to nearly $63 in recent days.
During the 173rd (Ordinary) OPEC Meeting and the third OPEC and non-OPEC Ministerial Meeting in Vienna, the organization and oil producing countries led by Russia decided to extend an oil production cap of 1.8 million barrels per day (bdp) further to the end of December 2018, which was due to end in March '18.
'It is very positive to see the Vienna agreement, the Declaration of Cooperation, is being successfully implemented and continues to have a strong positive impact on oil market,' Russian Energy Minister Alexander Novak said.
'Today as we approach to the intermediate point in our Vienna agreement, I think it is very important for us to analyze intermediary goals and results, and to choose our strategy which we like to follow in 2018,' Russian minister continued.
Novak underlined that the market continues to see inventory draws both on the global levels and various key regions, significantly helping decline volatility and therefore the return of investment into the sector.
'In order to rebalance the market, we must continue to act in a coordinated fashion, to act jointly which will take us further to 2018,' he asserted.
Khalid Al-Falih, Saudi Arabia's minister of energy, industry and mineral resources and the president of the OPEC conference, said that the results of OPEC's and non-OPEC countries' joint efforts are evident and 'the numbers speak for themselves.'
Al Falih stressed the cooperation of OPEC and non-OPEC producers has made extraordinary difference that has intensified the impact of their efforts and produce the improvements in the oil markets' positive reaction.
'There is now global recognition that without our collaborative action, the market would have continue to exhibit extreme volatility and future uncertainty with far reaching negative consequences for producers consumers, investors, the industry and the global economy at large,' Saudi minister said.
On IMF's forecasts for the global growth in 2018 at 3.7%, al Falih said that the direction of the oil market over the past several months showed a distinct improvement.
'This gratifying outcome has resulted primarily for 100 percent or more compliance to the production targets by OPEC and non OPEC producers. Such positive developments show that we are heading in the right direction but we still have more to do in terms of inventories and reaching the target levels,' he said.
- OPEC production cut
OPEC members on Nov. 30 last year unanimously agreed to lower oil production by 1.2 million barrels per day (bpd) down to 32.5 million bpd, which became effective on Jan. 1, 2017. This is the first production cut by the organization in eight years, and its first intervention in the global oil market since mid-2014 when oil prices began to fall.
Also, the non-OPEC oil producing countries led by Russia agreed to contribute a cap of 600 thousand bpd, which brought the total production cut up to 1.8 million bdp.
Organization for Economic Co-operation and Development stock overhang was 280 million barrels above the moving five-year average, but that it had since fallen by almost 50 percent to 140 million barrels for the month of October.
By Ebru Sengul
Anadolu Agency
energy@aa.com.tr