Saudi Arabia and
Russia, the world's two top oil producers, agreed on Monday on the need
to extend oil output cuts for a further nine months until March 2018 to
rein in a global crude glut, pushing up prices.
The
timing of the announcement ahead of OPEC's next official meeting on May
25 and the statement's strong wording surprised markets, and the move
is expected to go a long way to ensure that other OPEC members and
producers who participated in the initial round of cuts fall into line.
In a joint statement that followed an earlier meeting, Saudi energy minister Khalid al-Falih and his Russian counterpart Alexander Novak said they had agreed to prolong an existing deal until March next year.
Saudi, the defacto leader of OPEC, and Russia, the world's biggest producer, together control a fifth of global supplies, but have been spurred into action as crude futures LCOc1CLc1 have languished around $50 per barrel.
Under the current agreement that started on Jan. 1, the Organization of the Petroleum Exporting Countries (OPEC), and other producers including Russia pledged to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year.
While it was broadly expected that OPEC and Russia would agree to extend the cut, the timing and wording of the statement sent crude prices up more than 1.5 percent in Asian trading.
Russia's top producer Rosneft helped prepare the deal and is ready to comply with the extension, according to Russian media.
In a joint statement that followed an earlier meeting, Saudi energy minister Khalid al-Falih and his Russian counterpart Alexander Novak said they had agreed to prolong an existing deal until March next year.
Saudi, the defacto leader of OPEC, and Russia, the world's biggest producer, together control a fifth of global supplies, but have been spurred into action as crude futures LCOc1CLc1 have languished around $50 per barrel.
Under the current agreement that started on Jan. 1, the Organization of the Petroleum Exporting Countries (OPEC), and other producers including Russia pledged to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year.
While it was broadly expected that OPEC and Russia would agree to extend the cut, the timing and wording of the statement sent crude prices up more than 1.5 percent in Asian trading.
Russia's top producer Rosneft helped prepare the deal and is ready to comply with the extension, according to Russian media.
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