OPEC members have reached an agreement with other major oil producing nations, including Russia, to extend production cuts into next year amid concerns over weaker global growth.
“We have come to the opinion that we need to continue our joint cooperation for another nine months until March 2020. We also agreed to closely monitor the situation on a monthly basis,” Russian Energy Minister Aleksandr Novak said in a tweet on July 2 following the meeting.
The new agreement by the group of countries will prolong a reduction in oil production of 1.2 million barrels a day that went into effect on January 1. The majority of the cut came from OPEC nations.
The July 2 meeting at OPEC’s headquarters in Vienna also included Mexico, Bahrain, Oman, and Kazakhstan. The United States, now the world’s largest oil producer by monthly production, is not part of the discussions.
Novak said that while the global oil market is currently stable, there are many factors that could upset it, including trade wars and sanctions against oil producing countries. Washington has ramped up sanctions against Iran, an OPEC member, resulting in sliding output from the Middle East nation.
Novak said the group could increase oil output later this year if there is a deficit.
But he and Saudi Arabian Energy Minister Khalid al-Falih said they expect global demand to pick up in the second half, reducing oil inventories.
The Russian energy minister said he forecasts global oil demand to rise this year by 1.1 million to 1.2 million barrels a day. That would imply a slowdown in growth from 1.3 million barrels a day last year, according to data from the International Energy Agency.
The United States has increased oil production in recent years, putting pressure on global prices and squeezing OPEC.
U.S. oil production hit a record 12 million barrels a day in April. Russia and Saudi Arabia fill out the top three positions, with approximately 11 million and 10 million barrels a day, respectively.