OPEC announces production cut extension

OPEC is to extend the global production cut agreement reached last year by a further 9 months, the group decided at a meeting in Vienna on Thursday.

The cartel also welcomed Equatorial Guinea to its ranks as a member, said Khalid Al Falih, minister of energy, industry and mineral resources of Saudi Arabia, in his opening remarks at a assembly.

Under the deal, Libya and Nigeria would continue to be exempt from the cuts while Iran’s production ceiling would stay the same, Bloomberg reported. Talks with non-member producers, including Russia, are expected later in the day, an unnamed delegate told the agency.

The move had largely been expected by the market, and Brent crude futures for July delivery declined by about 1% after the news broke, standing at USD 53.5 at 2:05pm in London.

“The market seems to be a bit disappointed as there is no something extra the markets waited for,” Jan Edelmann, an analyst at HSH Nordbank, told Bloomberg.

“It seems as though OPEC fears letting the stock-draw run too hot.”

OPEC officials, who have come under increasing pressure from US shale producers in recent months, vowed to continue fighting the glut.

“The market has seen OPEC’s firm and unwavering resolve, along with that of the participating non-OPEC producing countries, as reflected in the high level of conformity – with reductions exceeding 100 percent of the target in first four months of the agreement,” Al Falih said in his opening remarks.

“Nevertheless, vigilance should be the watchword of the day, and it is critical that we do not become complacent.”