Russia, Saudi Arabia agree to extend oil production cuts

Russia on Saturday agreed with Saudi Arabia to extend by six to nine months a deal with OPEC on reducing oil production, Russian President Vladimir Putin said.

Putin, speaking after talks with Saudi Crown Prince Mohammed bin Salman, told a news conference that the deal would be extended in its current form and with the same volumes.

The Organization of Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, will meet on July 1-2 to discuss the deal that involves curbing oil output by 1.2 million barrels per day (bpd). The pact expires after June 30.

“We will support the extension, both Russia and Saudi Arabia. As far as the length of the extension is concerned, we have yet to decide whether it will be six or nine months. Maybe it will be nine months,” said Putin said, who met the crown prince on the sidelines of a G20 summit in Japan.

A nine-month extension would mean the deal runs out in March 2020.

Kirill Dmitriev, the chief executive of Russian Direct Investment Fund who helped design the OPEC-Russia deal, said the pact in place since 2017 has already lifted Russian budget revenues by more than 7 trillion roubles ($110 billion).

“The strategic partnership within OPEC+ has led to the stabilisation of oil markets and allows both to reduce and increase production depending on the market demand conditions, which contributes to the predictability and growth of investments in the industry,” Dmitriev said.

Benchmark Brent has climbed more than 25 percent since the start of the 2019. But prices could stall as a slowing global economy squeezes demand and U.S. crude floods the market, a Reuters poll of analysts found.

Reuters