OPEC members in favour of extending production cut but Russia in no rush – Nomura

Based on recent comments, the skew among OPEC participants of the current production cut accord favours an extension beyond March 2018, with a six- to nine-month period flagged, according to analysts at Nomura.

Key Quotes

“A deepening of the cuts doesn’t look to be part of the discussions. Saudi Arabia’s Energy Minister said last Friday that OPEC should announce an oil production cut extension at next week’s meeting. UAE has since backed the motion to extend cuts, and Iran’s Oil Minister also said on Monday that most OPEC members supported an extension of the cuts (Bloomberg).” 

“That said, and importantly, reports also indicate that Russian officials think it is too early to make a decision at the November meeting and prefer to wait until closer to March when the current deal expires. Russia is also reported to have consulted with oil companies on a six-month extension, which was opposed by one of the oil companies (Bloomberg). As an important participant in the production cuts, we see a sizeable risk Russia prevents an extension being confirmed until early 2018. Furthermore, a shorter extension than nine months is also possible, which would disappoint lofty expectations.”