Sept. 25 (UPI) — A source close to negotiations over an OPEC-led effort to balance the market with production cuts told Russian media Monday an extension was under review.
The Organization of Petroleum Exporting Countries and a handful of non-member state producers like Russia started implementing an agreement in January to bring the five-year average for global oil stockpiles closer to even with managed production cuts. The agreement was supposed to last 12 months, but was extended to March earlier this year.
Russian news agency Tass reported Monday it was told by “a high-ranking source” within OPEC the consensus so far was mixed on extending the arrangement again.
“Currently, extension is under discussion for a period of 3-6 months,” the source was quoted as saying.
Members of a committee monitoring an agreement to cut the equivalent of about 2 percent of the world’s oil demand out of the market met Friday in Vienna to discuss the impact.
Most OPEC members are in full compliance with the agreement, though exemptions for OPEC members Libya and Nigeria have complicated the effort. Both countries were sidelined from the effort so they could steer oil revenue toward national security efforts.
Russian Energy Minister Alexander Novak hinted last week that Nigeria could give up its exempt status once its production stabilizes at around 1.8 million barrels per day. Secondary sources reporting to OPEC economists said Nigeria production in August was 1.86 million barrels per day, its highest level of the year. First quarter production for Nigeria averaged 1.5 million barrels per day.
The OPEC source told Tass that a lot depends on what happens between now and Nov. 30, when the balancing effort will be considered during OPEC’s next regular meeting in Vienna.
“The current agreement includes only extraction monitoring,” the source said. “If they want to monitor something else, they have to decide at the conference.”
Russia is a member of the committee monitoring the agreement and its largest contributor among non-OPEC members.
The agreement helped crude oil prices recover from historic lows last year. Brent, the global benchmark for the price of oil, was up more than 1 percent in early Monday trading. Too strong of a rally for crude oil prices could stimulate production from the United States and others not party to the agreement.