OPEC extends oil production cut by 9 months
Strong demand driving the rise in oil prices?
PRICE Futures Group’s Phil Flynn on the outlook for oil prices.
A meeting Monday of OPEC ministers resulted in the global oil cartel agreeing to a nine-month extension of its current deal to cut production.
The group is facing a weaker demand outlook due to slowing global growth.
U.S. crude futures rose more than 1 percent to settle at $58.98.51 per barrel.
The extension was not unexpected. Saudi Arabia's Energy Minister Khalid Al-Falih, asked if a six- or nine-month extension was more likely, said that “we will not know for sure until tomorrow. Most countries want nine months.”
The head of Nigeria's delegation, Folasade Yemi-Esan, said Monday that her country “strongly endorsed” an extension of the deal for nine months, saying that would “offer greater certainty to the market.”
The current deal reduced production by 1.2 million barrels per day starting from Jan. 1.
Tensions between the U.S. and Iran and attacks on tankers near the Strait of Hormuz have sent oil prices higher in recent days.
Over the longer term, demand could weaken according to the International Energy Agency, which cut its demand estimate earlier this month.
Experts say a military conflict between the U.S. and Iran would further constrain oil supply and send oil prices higher.
The Associated Press contributed to this article.