Oil prices rose after OPEC and non-OPEC members Thursday agreed to extend the current output cap, until the end of 2018. The group also stated its intention to meet on June 21, to discuss the situation and make changes to the cap agreement, if required.
By 0700 BST, Friday, the price of Brent crude oil had risen 0.40% to $62.88. Meanwhile, the price of US WTI oil was 0.33% higher at $57.59.
OPEC confirms agreement
OPEC confirmed late Thursday the group had extended the ‘Declaration of Co-operation’ until the end of next year, from the original end date of March 2018.
The other change to the output cap is that two additional countries – Nigeria and Libya - have agreed to formally enter the agreement. Both countries were previously exempt.
“The Declaration of Cooperation is hereby amended to take effect for the whole year of 2018 from January to December 2018, while pledging full and timely conformity of OPEC and participating non-OPEC countries in accordance with voluntary agreed production adjustments,” an OPEC press release read.
“In view of the uncertainties associated mainly with supply and, to some extent, demand growth it is intended that in June 2018, the opportunity of further adjustment actions will be considered based on prevailing market conditions and the progress achieved towards re-balancing of the oil market at that time,” OPEC added.
Confirmation the output cap has been extended, means investors will once again turn to other geopolitical events, oil supply data and export details when considering their oil positions. Some analysts anticipate that will mean the oil price will remain broadly around current levels over the the coming months.
“Oil prices are likely to hover around current levels till next June, when stockpiles would be optimised through continued production cuts, but the market will likely tighten after that,” said Kiyoshi Homma, a director at Idemitsu Kosan, according to a Reuters report.