Members of the organization agreed to prolong their accord through March, said a delegate familiar with the decision, asking not to be identified before an official announcement is made. Ministers are scheduled to discuss the extension with non-member producers later on Thursday.
Six months after forming an unprecedented coalition of 24 nations and delivering output reductions that exceeded expectations, some of the world’s largest oil producers have faced the fact that they’ve fallen short of their goal. While stockpiles are shrinking, ministers acknowledged that the surplus built up during three years of overproduction won’t clear until at least the end of 2017.
Extending the deal will bring price stability, Nigerian Oil Minister Emmanuel Kachikwu said in a Bloomberg Television interview before Thursday’s meeting in Vienna, suggesting a “$50 floor” for oil if producers stick to their cuts, or even a “crawl back to $60” a barrel.
The Organization of Petroleum Exporting Countries agreed in November to cut output by about 1.2 million barrels a day. Eleven non-members including Russia joined the deal in December, bringing the total supply reduction to about 1.8 million. The curbs were intended to last six months from January, but confidence in the deal, which boosted prices as much as 20 percent, waned as inventories remained stubbornly high and U.S. output surged.