OPEC may make further production cuts and extend an existing deal to curb oil output for a further nine months as it battles to prop up global prices in the face of a resurgent American shale industry.
Ministers of the 13 member states of the oil exporters’ group, which pumps a third of the world’s oil, will gather in Vienna on Thursday for a biannual policy meeting. At a preliminary meeting yesterday, representatives studied several scenarios, including the option of making deeper cuts, as they sketched out a possible supply deal.
Opec clipped its daily production quota by 1.2 million barrels per day from January 1 in an attempt to drive up prices after two years of low returns that have ravaged the economies of many oil-dependent countries. That deal remains in force, but it is due to be reappraised in Vienna in the wake of a study of its effectiveness in rebalancing the global oil market.
Russia and other non-Opec oil exporter nations agreed to collaborate in the deal by cutting their output by 600,000 barrels per day.
While the existing deal succeeded in driving prices to above $50 a barrel, the action has had only a limited impact on its primary goal: draining a global glut that has built up since 2014. The overhang is starting to ease, but far more slowly than Opec hoped.