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The OPEC + technical meeting ended Monday with widespread support for a three-month extension of the current level of oil production cuts, sources told Reuters Monday.
OPEC sources hinted last week that many members were in favor of extending the production cuts that were expected to fall by 2.0 million barrels a day in January, to 5.7 million barrels a day.
Other members were in favor of even more drastic measures, which included deeper cuts in January.
While the group’s agreement to stick around seems to have the support of most group members, the challenges remain. Some members, including Iraq, have said they may not be on board with a deal unless it gets the unanimous support of all members.
Meanwhile, Libya, which has hinted that it is asking to continue to be exempted from production cuts until its production stabilizes at around 1.7 million barrels per day, continues to add production to the mix now that the blockade that has plagued the country for months is over. This reality has added nearly a million barrels a day into the mix at a time when OPEC + is desperately trying to remove barrels from the market.
Regardless of how many barrels of oil that extending the current level of cuts actually removes from the market, any move by OPEC + to extend the cuts beyond January will be welcomed by the market and if oil prices persist.
Despite OPEC’s best efforts to rebalance oil markets, the cartel has come under fire as oil demand falls sharply with the pandemic blockades.
Oil prices were eagerly awaiting the group’s direction and by 3:15 pm ET, Brent was trading up $ 1.08 (2.52%) to $ 43.86 a barrel.
OPEC’s next agenda is the Joint Ministerial Monitoring Committee, which will recommend what action OPEC + should take. A final decision is expected to come out of the full OPEC meeting on November 30 and December 1.
By Julianne Geiger for Oil “
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