OPEC, Russia set to extend oil production curbs
- Ben Geman, author of Axios Generate
Russian President Vladimir Putin at the G-20 Summit in 2019. Photo: Mikhail Svetlov/Getty Images
The current agreement between OPEC and Russia to limit oil output is all but certain to be extended, a decision that alongside the easing of U.S.-China trade tensions could temper downward pressure on crude oil prices from the economic slowdown.
Driving the news: Russian President Vladimir Putin said at the G-20 meeting in Japan that the "OPEC+" agreement, which jointly curbs production by 1.2 million barrels per day, would be extended by 6-9 months, per Reuters and other outlets. He spoke Saturday after meeting with Saudi Crown Prince Mohammed bin Salman.
Context: While that’s just a small slice of the nearly 100 million barrel per day global oil market, even somewhat marginal changes in supply and demand can substantially influence prices.
Why it matters: While an extension of the deal that expires this month has been expected, Putin's comments make the outcome of the July 1-2 OPEC+ meeting in Vienna "all but a foregone conclusion," Bloomberg notes.
More broadly, the Russia-Saudi collaboration shows how the U.S. production surge this decade has shaken up the geopolitics of oil, challenging OPEC and forcing the cartel to seek new strategies.
- The U.S. is now the world's biggest crude oil producer, ahead of both Russia and Saudi Arabia, the two other largest.
By the numbers: Per Bloomberg: "This year the OPEC+ alliance has cut production by more than the pledged 1.2 million barrels a day as U.S. sanctions on Iran and Venezuela slashed output from both countries. Saudi Arabia also unilaterally made deeper curbs, pumping 9.7 million barrels a day in May, compared with its OPEC+ ceiling of 10.3 million."