OPEC+ ready to extend production cuts

OPEC and its allies have reached a consensus on the need to extend oil output cuts after March 2020, Oman's Minister of Oil and Gas Mohammed bin Hamad Al Rumhi said.

"I think that we should extend the [agreement] until [late] December 2020, because I do not think things are going to change in the market in the next [after March 2020] nine months," TASS cited him as saying.

Al-Rumhi explained his position by the possible impact of U.S. 2020 presidential elections on the market.

Oman's Minister of Oil and Gas added that OPEC and its non-OPEC allies support the extension of the deal until the end of the year, but have nothing against the extension until late March 2021.

The minister noted that they didn't discussed an increase in production cuts.

The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, speaking to Vestnik Kavkaza, noted that the extension of the OPEC+ deal until the end of 2020 is expected. "In fact, there are no other options. The two largest centers of economic development - China and the European Union - are located east and west of the largest production centers: Russia, Iran and Saudi Arabia, no other significant oil and gas reserves exist in Eurasia, but they need reliable fuel supplies. The Americans are fighting for the Chinese and European markets. The competition is serious, so OPEC and its partners, primarily Russia, are interested in the deal being extended," the expert explained.

Regarding Al-Rumhi's idea on the impact of the U.S. presidential election on the global oil market, it will not be significant, Valery Bessel expects. "All U.S. shale oil is used to compensate for the difference of 250 million tons in the oil equivalent between energy consumption and production of the country," he said.

"The Gulf countries will be much more negotiable within the OPEC +, given that the U.S. needs less oil imports, especially from the Gulf countries. Now it's much more profitable for the Gulf countries to extend the deal to maintain their markets. The agreement is the best option," the executive vice-president of NewTech Services concluded.