OPEC and allied non-OPEC producers have agreed to extend oil production cuts at current levels for nine more months through March 2018.
Oil markets, which had been expecting exactly this result for days now, fell on disappointment that OPEC didn’t go further and increase the size of production cuts. The cuts, originally agreed in November 2017, and initially scheduled to run for six months, promised to reduce production by a total of 1.8 million barrels a day with 1.2 million barrels coming from OPEC members and the remainder coming from 11 non-OPEC oil producers including Russia. As in the original agreement, Nigeria and Libya will be exempt from making any cuts.
At 11: 30 a.m. in New York, U.S. benchmark West Texas Intermediate had declined by 2.22% to $50.22 a barrel. International benchmark Brent crude was down 1.89% to $52.94.
Saudi Oil Minister Khalid Al-Falih said Thursday that the cuts are working, saying stockpile reductions will accelerate in the third quarter and inventory levels will come down to the five-year average in the first quarter of next year.