Jun 29, 2019 - Energy & Climate

OPEC, Russia set to extend oil production curbs

Ben Geman

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."

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OPEC, Russia set to extend oil production curbs

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