Ten non-OPEC oil producers agreed to a nine-month rollover of supply cuts, this week, certifying a policy aimed at buoying crude prices at a time when the global economy is getting soft. The decision comes not even a day after energy ministers from some of the most powerful oil-producing countries hashed out a new deal to hold back on the amount of crude circulating the global market.
OPEC agreed to extend its production cuts until March 2020, at least. Dominated by Middle East nations, the energy alliance finally overcome their major differences at the conclusion of a five hour negotiation, in Vienna. The energy alliance said it had made this decision to extend the production cuts “in view of the underlying large uncertainties and its potential implications on the global oil market.”
That in mind, the international benchmark, Brent crude, reached a trading value of nearly $64.50, which is down about 0.8 percent. On top of this, US West Texas Intermediate came to trade approximately 1 percent down, at $58.55 per barrel.
In all, the energy alliance between OPEC and non-OPEC partners, often referred to as OPEC+, has been observing a reduction capacity since 2017. The strategy was designed to prevent oil prices from sliding at a time when US production has been soaring. As a matter of fact, the US has risen to the top producer in the world, even over Russia and Saudi Arabia.
Now, the United States is not a member of OPEC and, more importantly, is not participating in the current supply pact. As a matter of fact, Washington has demanded that Riyadh pump more oil to compensate for notably lower exports from Iran after implementing brand new sanctions on Tehran because of its nuclear program.
Extending OPEC-led supply cuts is certainly not a favored policy by US President Donald Trump, particularly as he has repeatedly called for Saudi Arabia to bump up oil output as a strategy for cutting pump prices. And since the White House tightened economic sanctions against OPEC members Iran and Venezuela—which slashed their export margin—Brent crude has jumped at least 25 percent this year, so far.