OPEC and Russia agree to extend oil cut to end of 2018

Leonhard Foeger | Reuters

OPEC President, Saudi Arabia’s Energy Minister Khalid al-Falih, and OPEC Secretary General Mohammad Barkindo talk to journalists before the beginning of a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, May 25, 2017.

“To the market, we say there are no surprises to be expected from Libya and Nigeria,” Saudi Energy Minister and current OPEC president Khalid al-Falih.

Falih exceeded expectations by securing Nigeria and Libya’s cooperation, according to RBC Capital Markets’ Global Head of Commodity Strategy Helima Croft.

“Throughout the year he earned a reputation as a tough compliance enforcer. Whether his successor, UAE’s Suhail [Mazrouei], will be as stern on backsliders remains to be seen,” she told CNBC, referring to the incoming OPEC president.

Earlier Thursday, Falih told CNBC thatOPEC’s consensus was “almost complete,” before adding he did not anticipate an exit from the deal in the first six months of 2018.

The agreement does not include U.S. shale oil producers, and there are concerns that rising oil prices, largely thanks to the oil output cut, has allowed U.S. producers to come back online.

Ahead of the deal, however, Nigeria’s oil minister had insisted the group was “aligned” and was in agreement about extending the cuts, despite the risk of a strong comeback by U.S. shale oil producers.