Saudi oil minister confident in extension of production cuts

Anas Alhajji, an independent oil analyst and economist, said: "It will complicate the OPEC efforts to stabilise the market".

He will be representing India at the head of a delegation comprising major Indian refiners at a meeting scheduled by the OPEC here on Thursday.

OPEC and its allies were poised to continue their production cuts for another nine months after Iraq backed an extension, removing one of the last remaining obstacles to an agreement.

Oil prices had earlier fallen by more than 50 per cent in less than two years, from levels of over $120 a barrel.

For the year to date, Saudi Arabia still stood a touch higher over Russian Federation, with 18.314 million tonnes supplied versus Russia's 18.29 million tonnes.

"Iraq agrees with Saudi Arabia's position on extending the agreement to reduce oil production for an additional nine months", the Iraqi minister announced on May 22. The cuts were initially agreed to last six months until the end of June. Despite concerns over rising usa production, that could be enough to inject fresh impetus into the oil price rally. Prolonging the cuts will help producers reach their goal of trimming stockpiles in developed economies to the five-year average, Saudi Arabia's Energy Minister Khalid Al-Falih said Sunday.

The U.S. strategic petroleum reserves (SPR) are the world's biggest, standing at around 688 million barrels, a week's worth of global oil demand. "But if the US market keeps adding 30 rigs a month till then, production is likely to grow by 2.3 million barrels a day, putting a downside price risk on 2018 and 2019".

Prior to Pradhan's departure for here on Sunday, Petroleum Ministry officials in New Delhi said India's strategy at the OPEC meeting would be to leverage its massive market size for better terms like discounts and longer credit period.

Iran is most likely to go along with such extension plan as well. Al-Falih achieved a notable success toward that goal on Monday when he secured the support of Iraq after a last-minute - and rare - trip to Baghdad. Non-OPEC nations Oman and Mexico also confirmed their support for a nine-month extension.

"Any surprise could possibly come from the bullish side-a deeper than expected cut in the form of more non-OPEC producers joining the deal and/or giving Nigeria, Libya a quota, too", said PVM's Mr. Varga.

PVM said if US imports in coming years matched those of 2016, the country would need to keep 489 million barrels of oil in the SPR, some 140-150 million barrels above the proposed new level.

"OPEC were saying they want to bring down inventories and it hasn't happened yet which is why we expect an extension", said Giovanni Staunovo, analyst at UBS. It may instead produce more as it completes maintenance at several fields, new ones start production and seasonal domestic consumption rises, he said.

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