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Saudi Arabias oil minister Khalid al-Falih and the Russian energy minister Alexander Novak announced on Monday that the two of the biggest oil exporters in the world have agreed that the current supply reduction deal, which was agreed back in November last year with an aim to reduce global oil supply by 1.8 million barrels per day requires extension. Without an official extension by the OPEC members, the deal is set to expire this June. The duo said that the oil deal to get extended beyond this year and up to March next year.
Mr. Falih said that the terms of the deal or the targeted levels of production are unlikely to get revised while the tenure is extended. According to both the ministers, the deal aims to rebalance the supply and demand globally with an aim to bring down global inventories to the levels of the 5-year average.
While the investors were initially cheering the OPEC deal in last November but as its impact underwhelmed and the production from the United States continued to rise, speculators have been revising their long positions in last few months or so. However, the oil price leaped today on the news of an agreement between the two most powerful oil exporters. WTI is currently trading at $48.6 per barrel, up 1.5 percent for the day so far and Brent is trading at 43 per barrel premium to WTI.
