Vienna: All OPEC states are supporting a full-year extension when they meet on Nov. 30, yet Russia is still not giving any confirmation on the duration of the extension, sources told Arab News.
Saudi Arabia and Russia are leading the global efforts to extend the current agreement to curtail production of 24 countries by 1.8 million barrels a day (bpd) to rebalance the oil market and to bring global inventories back to their five-year average. The agreement, which will expire in March, has helped in raising oil prices in the past few days to levels not seen since 2015.
“All members of OPEC want to extend the deal until the end of 2018 and many non-OPEC members such as Oman and Bahrain want that too, but we are still waiting to hear from Russian officials as they are giving mixed signals,” a source familiar with the talks told the Arab News.
Oil markets will rebalance some time in the third quarter of 2018, according to OPEC’s own estimates, a source told Arab News. The calculations were confirmed by OPEC’s Economic Commission Board (ECB), raising the possibilities for extending production cuts well into next year.
The conclusion from OPEC’s national representatives attending the ECB meeting and the group’s secretariat is enough to convince OPEC but it might not be enough to convince the Russians.
“Russians are complaining about high oil prices and they don’t want to see prices shooting up above $60,” one of the sources said. “They see the market rebalancing a few months earlier than OPEC’s forecast, so they are happy with a shorter period of extension.”
The head of Russia’s top oil producer Rosneft, Igor Sechin, a close ally of President Vladimir Putin and a critic of the deal with OPEC, has said the recent price rally lends too much support to the rival US shale industry, which does not participate in cuts.
OPEC’s leader Saudi Arabia has signaled that it wanted oil to trade at about $60 per barrel as the Kingdom is preparing to list its national oil champion Aramco and is still fighting a large fiscal deficit.
Russia also needs high oil prices before the presidential election in March 2018. But officials in Moscow have also expressed worries about an overly strong rouble, which would undermine the competitiveness of its economy.
OPEC’s members, however, are looking for full-year commitment as it is the only way to ensure markets that 2018 will be a stable year. OPEC offered Russians an option to adjust supply next year based on any new development and that will be included in the new terms of the deal, a source said.
The countries have no option but to agree to a full-year extension when they meet as any other option will result in a fall in oil prices, one of the sources said.
OPEC mulls over full-year extension with no clear answer from Russia
OPEC mulls over full-year extension with no clear answer from Russia
US allows countries to buy Russian oil stranded at sea for 30 days
- US issues 30-day license for stranded Russian oil purchases
- Measure the latest by Trump administration to calm energy markets jolted by Iran war
The United States issued a 30-day license for countries to buy Russian oil and petroleum products currently stranded at sea in what Treasury Secretary Scott Bessent said was a step to stabilize global energy markets roiled by the Iran war.
The announcement comes a day after the US Energy Department said that the US would be releasing 172 million barrels of oil from the strategic petroleum reserve in an effort to curb sky-rocketing oil prices in the wake of the war in Iran. That release was part of a broader commitment by the 32-nation International Energy Agency to release 400 million barrels of oil. The agency said earlier on Thursday that he war in the Middle East was creating the biggest oil supply disruption in history. Bessent, in a statement on X released hours after benchmark oil prices shot above $100 a barrel, said the measure was “narrowly tailored” and “short-term” and would not provide significant financial benefit to the Russian government.
“The temporary increase in oil prices is a short-term and temporary disruption that will result in a massive benefit to our nation and economy in the long-term,” Bessent said in the statement, echoing President Donald Trump.
Thursday’s license, which authorizes the delivery and sale of Russian crude oil and petroleum products loaded on vessels as of March 12, will remain valid through midnight Washington time on April 11, according to the text of the license posted on the Treasury Department’s website. The US Treasury previously issued a 30-day waiver on March 5 specifically for India, allowing New Delhi to buy Russian oil stuck at sea. Among other measures to tame energy prices, Trump has already ordered the US International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf and said the US Navy could escort ships in the region. In another attempt to control prices, the Trump administration is considering temporarily waiving a shipping rule known as the Jones Act to ensure energy and agricultural products can move freely between US ports, the White House said. Waiving the rule would allow foreign ships to carry fuel between US ports, potentially lowering costs and speeding deliveries.
“The president is taking every action he can to lower prices ... unsanctioned oil that’s at sea to get that into the market, continuing to push our own producers to drill and expand production as fast and as far as they can, providing regulatory relief, and you’re going to see more and more in the days to come,” White House Deputy Chief of Staff Stephen Miller told Fox News’ “Primetime” program on Thursday.
There were about 124 million barrels of Russian-origin oil on water across 30 different locations globally as of Thursday, Fox News reported, adding that the US license would provide around five to six days of supply when taking into account the daily loss of oil from the Strait. Trump said earlier on Thursday the United States stood to make significant money from oil prices driven higher by the war, prompting criticism from some lawmakers who accused him of caring only about rich people.
US and Israeli strikes on Iran and the subsequent response by Tehran have widened regional tensions and paralyzed shipping through the Strait of Hormuz, disrupting vital Middle East oil and gas flows and sending energy prices higher.
Raising the stakes for the global economy, Iran’s Islamic Revolutionary Guard Corps says it will block oil shipments from the Gulf unless the US and Israeli attacks cease.
