Oil in Global Economy Series: Source says OPEC likely to extend deal until 2018 end

Reuters is reporting citing four anonymous sources that OPEC members and non-member participating countries like Russia will go ahead with an extension of the current supply reduction agreement that is aimed at reducing global supplies by 1.76 million barrels per day, for another nine months until the end of 2018.

Earlier this week, Kuwaiti oil minister Marzouq, who sits on the committee responsible for monitoring the compliance of individual countries with the agreement said that there is no need for a further extension of the supply reduction agreement if every member complies with the deal. Though he said citing August figure that the OPEC compliance has hit 116 percent, data from secondary sources suggest that it remain marginally incompliant with the agreement. International Energy said that OPEC compliance at 87 percent for the first 9 months of the year.

However, the future of the agreement rests on four countries; Saudi Arabia, Russia, Iran, and Iraq. Iran remains ready for an extension of the agreement along with Russia. Iraq wants to increase its production, however, there is likely to be less support for that and the country is unlikely to become a dissenter. Saudi Arabia is likely to agree to a further extension as it looks to enhance the valuation of its Aramco IPO with higher oil price.

OPEC and non-OPEC members will gather in Vienna on November 30th o decide the future of the agreement.

WTI is currently trading at $51.4 per barrel, while Brent is at $6.3 per barrel premium to WTI.

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