OPEC and its allies are discussing extending by more than three months the oil production cuts that expire in March 2018, potentially prolonging them well into the second half of next year in an effort to boost prices, Bloomberg reports.
An extension of that duration would be needed under the worst-case scenario for the oil market that OPEC ministers are now contemplating, people familiar with the matter said. One option under discussion is a six-month extension, one person who did not want to be named said.
The initial deal, reached in late 2016, initially called for a six-month period, which later was extended with another nine months until the end of March 2018. Despite the cuts however, oil prices have struggled to break above $50 a barrel after being weighed down by the resurgence of U.S. shale production.
OPEC and its allies are now discussing a further rollover ahead of a ministerial meeting scheduled for late November in Vienna, with a three-month extension seen as the minimum, the people said.
The duration will depend on multiple variables, including the level of compliance with agreed cuts by OPEC and its allies, the pace of the oil-output recovery in Libya and Nigeria, U.S. shale supply and the strength of global demand.