The OPEC and their non-OPEC fellows are reported to have extended the so-called Vienna Accord today during the OPEC summit in the capital of Austria. The agreement designed to cut the participants’ oil production is expected to reduce the oversupply of crude oil in the global market in order to back higher oil prices. The agreement is extended for 9 months.
Without any doubt, the question of whether to extend the agreement or not was the key issue on the agenda during today’s summit in Vienna. Everyone has been looking for this day to finally see what’s coming next. To this day, international traders and investors have been uncertain about the situation and afraid to increase their market exposure just for the sake of avoiding unexpected results leading to possible losses.
However, at this point, the agreement is reported to have been extended, and that’s why the international community is now ready for higher oil prices triggered by further production cuts.
It’s also interesting to note that the participants of the summit considered several terms. In particular, some of them offered to extend the agreement for 6, 9 and even 12 months. However, the final decision was made in favor of the 9-month scenario. Russia also participate in the summit. According to Russian Energy Minister Alexander Novak, the question of the timespan for the agreement extension is secondary. Saudi Arabia’s Minister of Oil hopes that the agreement extension will really improve the situation in the global oil market in the coming months.
However, some experts disagree by saying that the extension will only make a short-term impact on the market and the overall effect will be capped and smoothened by the fact that American shale oil companies have been boosting their production to make up for the production cuts coming from those oil nations that signed the agreement. That’s why they don’t believe in oil prices above 60 dollars per barrel.
