MARYLAND/ U.S.A –
THE Organization of Petroleum Exporting Countries has agreed to extend its cap on oil production to the end of 2018.
It initiated the first round of cuts in January this year, carrying out a production reduction of 1.2 million a day for six months, but soon extended these cuts to March 2018 as the curbs were starting to show effect, bolstering oil prices.
Since the initial reduction deal was implemented, global oil stockpiles have fallen and driven prices upwards, taking them to a two-year high of US$64.27 in early November
The cartel met this week to decide whether to extend the production cuts beyond March in order to bolster prices further globally and stabilise a weak energy market.
Concerns were raised over the length of the forecast cuts, with two options on the table which would have extended the production reduction by either six or nine months, and the potential for Russia to veto ongoing shrinkage in the market.
The group reached consensus to extend the oil output cuts to December 2018.
The deal was also expanded to include Libya and Nigeria, two nations that were previously excluded from production caps due to ongoing internal conflict in the countries.
OPEC will also meet again in June 2018 to discuss the possibility of further cuts.
Oil prices reacted positively to the news, with Brent crude rising to US$62.63 overnight.