Saudi Arabia, Russia Reach Framework for Extending Cuts

Saudi Arabia, Russia Reach Framework for Extending Cuts

Russia and Saudi Arabia have agreed to a basic framework for extending the production-cut agreement, Bloomberg reports.

Both countries now see the need to announce an extension of the agreement following the meeting of the oil-producing countries on November 30th, sources told the news agency.

Saudi Arabia has been pushing for an extension.

The details of the extension still need to be worked out, the sources indicated, noting that Russia is seeking to modify the agreement to tie it to market conditions.

While the Russian President, Vladimir Putin, has expressed his willingness to consider an extension of the production-cut agreement until the end of 2018, Russian officials had indicated that the decision could be postponed until closer to the current expiration date, Bloomberg previously reported.

The Russian Oil Minister, Alexander Novak, said at the end of October that it was too early to make a decision, Reuters reported at the time.

Last week RT reported that Russia’s oil ministry was considering a six-month extension rather than the nine-month extension sought by Saudi Arabia.

“The goal to re-balance the market hasn’t been met in full yet, so everyone is in favor of extensions to reach final goals, Russia also supports these proposals,” Novak said in an interview last week, according to Bloomberg.

In January, OPEC and a number of non-OPEC members implemented an agreement to collectively cut production by 1.8 million barrels per day.  The current agreement is due to expire at the end of March.

The signatories of the deal are set to meet in Vienna later this week.

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