All Opec members have agreed to extend production cuts for a further six months, an Iraqi official said.
Such an agreement has yet to be reached with the non-Opec countries participating in the current campaign to reduce production by 1.8mn b/d over the first six months of this year to speed market rebalancing, although the largest non-Opec participant — Russia — has indicated it favours an extension.
Opec ministers convene in Vienna on 25 May and will hold separate talks with non-Opec countries.
The comments about a consensus over the principle, if not yet the detail, of an extension were prefigured in yesterday’s Opec’s Monthly Oil Market Report (MOMR), which pointed to a need to extend cuts beyond June in order to achieve market rebalancing by the end of the year.
The comment that there is already agreement among all Opec members follows Algerian oil minister Noureddine Boutarfa’s visit to his Iraqi counterpart Jabbar al-Luaibi this week. The two ministers indicated that they would support an extension of the deal into 2018, with Boutarfa saying he would agree to an extension for at least nine months.
At the Opec meeting in November last year, Iraq reluctantly pledged to reduce output by 210,000 b/d from a 4.56mn b/d reference production, based on secondary source figures. Iraq’s production in the MOMR report based on direct communication was at 4.531mn b/d in April. Iraq has an average target of 4.351mn b/d over January-June. Argus data placed Iraqi production at 4.41mn b/d in April, suggesting it is 72pc compliant.
Al-Luaibi said last month that he hopes extended output restraints will be at the same levels as those currently in place.