Russia has agreed with Saudi Arabia to extend by six to nine months a deal with Opec on reducing oil output, the Russian president, Vladimir Putin, said, as oil prices come under renewed pressure from rising US supplies and a slowing global economy.
The Saudi energy minister, Khalid al-Falih, said on Sunday that the deal would most likely be extended by nine months and no deeper reductions were needed.
Putin, speaking after talks with the Saudi crown prince, Mohammed bin Salman, told a news conference the deal – which is due to expire on Sunday – would be extended in its current form and with the same volumes.
The Organization of the Petroleum Exporting Countries, Russia and other producers, an alliance known as Opec+, meet on July 1-2 to discuss the deal, which involves curbing oil output by 1.2 million barrels per day.
The United States, the world’s largest oil producer ahead of Russia and Saudi Arabia, is not participating in the pact.
“We will support the extension, both Russia and Saudi Arabia. As far as the length of the extension is concerned, we have yet to decide whether it will be six or nine months. Maybe it will be nine months,” said Putin, who met the crown prince on the sidelines of a G20 summit in Japan.
Falih, arriving in Vienna for the Opec+ talks, told reporters when asked about Saudi preferences: “I think most likely a nine-month extension.”
Asked about a deeper cut, Falih said: “I don’t think the market needs that.”
“Demand is softening a little bit but I think it’s still healthy,” the Saudi minister said, adding that he expected the market to balance in the next six to nine months.
A nine-month extension would mean the deal runs out in March 2020. Russia’s consent means the Opec+ group may have a smooth meeting if Opec’s third-largest producer, Iran, also endorses the arrangement.
New US sanctions on Iran have reduced its exports to a trickle as Washington seeks to change what it calls a “corrupt” regime in Tehran. Iran has denounced the sanctions as illegal and says the White House is run by “mentally retarded” people.