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Russia, Saudi Arabia Support Extending Oil Output Cuts Into 2018

Russia's struggling economy relies heavily on income from oil and gas exports.
Russia's struggling economy relies heavily on income from oil and gas exports.

Major oil exporters Saudi Arabia and Russia say that an agreement to cut output should be extended through March 2018.

The statements on May 15 caused oil prices to rise on world markets.

The Organization of the Petroleum Exporting Countries (OPEC), Russia, and other producers initially agreed to reduce output by 1.8 million barrels per day in the first half of 2017, with a possible six-month extension.

"We've come to the conclusion that the agreement needs to be extended," Saudi Energy Minister Khalid al-Falih told a briefing in Beijing alongside his Russian counterpart, Aleksandr Novak.

The two ministers said the supply cuts should be extended for nine months, through March 2018, instead of just six.

Russian President Vladimir Putin later reiterated that Moscow backs a nine-month extension, saying it would increase stability in oil prices.

"I have met with the heads of the companies...and we support the proposal," Putin said in Beijing.

Leaders and senior officials were in the Chinese capital for a May 14-15 meeting on China's One Belt, One Road trade initiative.

The supply-cut deal has increased prices, but they remain below the $60 per barrel that Saudi Arabia would like to see.

Inventories remain high and countries not involved in the agreement, such as they United States, have not limited their output.

The Saudi and Russian statements prompted oil prices to rise by about 2.5 percent.

At one point after the announcement, global benchmark Brent crude oil was trading at $52.26, the highest since April 26.

Russia's struggling economy relies heavily on income from oil and gas exports.

With reporting by Reuters and AP
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