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Oil & Gas November 27, 2017 04:30:23 AM

OPEC Meeting Set to Extend Oil Cuts and Support Crude Prices

Paul Ploumis
ScrapMonster Author
The main talking point ahead of the meeting in Vienna on Thursday is Russia’s view of how long production curbs should remain in place.
OPEC Meeting Set to Extend Oil Cuts and Support Crude Prices

FT.COM- Will the Opec meeting maintain oil price gains?

The oil price has climbed to its highest level in two years above $63 a barrel, due to the tailwind from the production cut agreed by the cartel and big producers such as Russia 12 months ago. This resultant gain of almost 30 per cent for Brent crude since last November does, however, also reflect expectations that the 1.8m barrel a day cut will be extended for the rest of 2018.

The main talking point ahead of the meeting in Vienna on Thursday is Russia’s view of how long production curbs should remain in place. Unlike Saudi Arabia, Russia is less dependent on higher prices than the kingdom and is keen not to concede too much market share to rivals. Russian producers are chafing against the current deal with new fields set to come online in 2018.

Higher oil prices could mean a stronger Russian currency ahead of next year’s presidential election, hurting exports in general and knocking the economy.

Hence the option of only prolonging the deal until next September making the rounds, though most traders believe ultimately Russia will not take the risk of spooking the market.

Michael Burns, oil and gas partner at Ashurst said: “An agreement between Russia and Opec may well support further increases in prices . . . but it appears that the agreement requires further detailed work in order for it to be considered a done deal.”

Courtesy: www.ft.com

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