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Russian President Putin said that ahead of the OPEC+ meeting in Vienna that Russia and Saudi Arabia have agreed to extend the existing production cuts for another 6=9 months.  The U.S. is near record productions and exports. The cuts promised are at 1.2 bpd by OPEC and Non-OPEC.

Putin and Bin Salman G20

Russian President Vladimir Putin, over the weekend at the G-20 meeting in Japan said that Russia agreed with Saudi Arabia to extend the current deal with OPEC on reducing oil output for 6 to 9 months. Putin was speaking after talks with the Saudi crown prince, Mohammed bin Salman (pictured above). The current deal is due to expire on Sunday.

"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,"

Saudi Energy Minister Khalid al-Falih for his part said deal would likely be extended. Falih said the new deal would help reduce global oil stocks, balance the market and spur investments in future energy supplies.

“The agreement confirms that the Saudi-Russian partnership paved the way to guarantee the interest of producers and consumers and the continued growth of the global economy,” Falih tweeted.

Saudi Arabia Oil Minister

Saudi Energy Minister Khalid al-Falih

That Russia and Saudi Arabia effectively announced the deal before the Opec gatherings will likely anger smaller members of the organisation, who feel sidelined.

Some delegates said Iran might still put up a fight on Monday. Russia’s energy minister, Alexander Novak, said he believed most Opec members, including Iran, have already expressed support to extend the output-cutting deal. He said it may be wise to extend the agreement by nine rather than six months to avoid raising output during weak seasonal demand.

“It might make sense to keep the deal in place during the winter period,” Novak told reporters.

The OPEC+ meeting in Vienna comes at a critical time with oil prices down around 15% from recent highs, a trade war in affect and Iran sanctions on. Russia is dealing with a contanimated oil crisis. The POTUS has been brazenly telling Saudi Arabia to not cut, the U.S. has record productions and exports. The cut was promised at 1.2 bpd by OPEC and Non-OPEC last time. 

The 6th OPEC and non-OPEC Ministerial Meeting was held in Vienna, Austria, on Tuesday, 02  July 2019, under the Co-Chairmanship of OPEC’s President, HE Suhail Mohamed Al Mazrouei, Minister of Energy & Industry of the United Arab Emirates and Head of its Delegation, and HE Alexander Novak, Minister of Energy of the Russian Federation.

OPEC Meetings Schedule

OPEC July 2019 Meeting Schedule

Existing Agreement Highlights

  • Non-OPEC will cut 400K bpd 
  • Total cut to be 1.2 mbpd
  • Cut will be effective from January and last six months
  • Notes uncertainty about global economic growth
  • Russia's Novak says production cuts should help oil market rebalance quicker
  • Novak adds Oil market situation is 'challenging'
  • Countries given an exemption are Iran, Venezuela and Libya
  • Sausi Arabia's Al-Falih says Saudi January allocation will be 10.2 mbpd, Dec output will be around 10.7 mbpd
  • KSA says many customers added inventories on expectations of strict sanctions on Iran and those were loosened
  • Demand is lower as customers use those inventories
  • Next meeting will be in Vienna in April

"Accordingly, the 5th OPEC and non-OPEC Ministerial Meeting, following deliberations on the immediate oil market prospects and in view of a growing imbalance between global oil supply and demand in 2019, hereby decided to adjust the overall production by 1.2 mb/d, effective as of January 2019 for an initial period of six months. The contributions from OPEC and the voluntary contributions from non-OPEC participating countries of the ‘Declaration of Cooperation’ will correspond to 0.8 mb/d (2.5%), and 0.4 mb/d (2.0%), respectively." OPEC Press Staement

The ministerial monitoring committee includes six countries - Russia, Saudi Arabia, Kuwait, Venezuela, Algeria and Oman. Russian Minister of Energy Alexander Novak reaffirmed his countries view on production. Novak repeatedly has made a point of the success of the existing deal and Russia's compliance thereto. 


Crude prices jumped around 5 percent Friday morning on the news of the deal, The U.S. benchmark WTI rising to nearly $54 a barrel. As fears of a global glut sunk in, oil prices plunged more than 30 percent from $76 a barrel in early October down to just under $50 in November and early December.

U.S. Oil Production and OPEC

To keep it real the latest EIA report had the U.S. producing back near record highs of 12.1 mbpd, and we look at the pattern of U.S. exports with  record highs there also and also low imports from OPEC.



Charts via @ronh999

Source: OPEC. RonH Energy

From The TradersCommunity Research Desk

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