UPDATED 8:53 AM PT — Tuesday, July 2, 2019
OPEC has agreed to extend its cuts to oil production despite push back from the U.S. The member nations agreed to the move Monday in hopes of boosting the price of crude oil in the face of a weakening global economy.
The supply cuts are expected to last until March of 2020. However, the agreement may not go over well in the U.S. President Trump promised Saudi Arabia and other OPEC nations help with Iran as long as they hold up their end of the deal by supplying more oil into the market.
“Look, I spoke to Saudi Arabia when the oil prices, a year ago, were getting very high. And I wasn’t so nice. And I said, “You got to get some more oil into the system because what’s happening is no good.” Khalid Al-Falih, oil minister – Saudi Arabia
While the move may not score any points in Washington, it is a welcome development for Russia. Moscow is reliant on its energy exports, which is why it has been pushing OPEC and its allies to reduce oil production since 2017 to keep prices from falling.
“And everybody within OPEC and the majority of the countries that were present this morning were lending their support to a nine-month extension,” stated Saudi oil minister Khalid Al-Falih. “I am certain that non-OPEC members will adopt the recommendation of the JMMC for a nine-month extension.”
The alliance now needs approval from participating non-OPEC members to make the deal official. They are expected to approve the extension at a meeting Tuesday.