Russian Federation and Saudi Arabia agreed to prolong the OPEC+ global oil output cut, under which 25 oil-producing countries cut the extraction by 1.2 million barrels as compared to October 2018, Russia's president Vladimir Putin said in Osaka after negotiations with the Crown Prince of Saudi Arabia Mohammad Bin Salman on the sidelines of the G20 summit in Osaka, Japan.
Oil prices rose more than $1 a barrel on Monday after Saudi Arabia, Russia and Iraq backed an extension of supply cuts for another six to nine months ahead of an OPEC meeting in Vienna.
"It's going to be hard to hold onto the gains: there's going to be a question in the market as to whether the cuts are enough", said John Kilduff, a partner at Again Capital Management in NY.
The Russian President, Vladimir Putin reportedly said that the due deal is to be extended by 6-9 months, as oil prices have come under pressure from rising US supplies & a slowing global economy.
OPEC is meeting on Monday and will hold talks on Tuesday with Russian Federation and other allies, a grouping known as OPEC+, which Ghadhban said would involve discussing production cuts, compliance of oil producers and market movements.
By pushing through an extension until March 2020, Saudi Arabia is seeking to avoid cliffhanger meetings, when the group gathers only days - or even hours - before a round of curbs expire, according to a delegate briefed on the strategy.
Since Russia and Saudi Arabia came together to manage the oil market in late 2016, global benchmark Brent crude has oscillated between $45 and $85 a barrel.
OPEC agreed previous year to cut oil production by 1.2 million barrels per day to keep prices up.
"The important thing to me is that OPEC remains OPEC". The soaring production levels of shale oil in the United States and the weak outlook with regards to the entire industry as a whole, has forced the OPEC to continue with the output cut into 2020.
Prior to reimposition of the USA sanctions, Iran was the third-largest oil producer in OPEC.
Opec and its oil-producing allies shifted on Monday towards extending their daily output caps, sending oil prices racing higher before the outcome of the group's official gathering.
Putin announced that the pair agreed on the sidelines of the G20 in Osaka on an extension of between six and nine months.
Factions in modern OPEC have been amplified by United States sanctions on Iran and Venezuela, which have sidelined hundreds of thousands of barrels of crude.
Oil prices could stall as a slowing global economy squeezes demand and US oil floods the market, a Reuters poll of analysts found.
Under a deal reached with Opec and other oil producers, Russian Federation had agreed to reduce output by 228,000 bpd from the October 2018 baseline, indicating it should keep total output around the 11.17 million-11.18 million bpd level.
According to the OPEC's June Oil Market Report, U.S. production grew by 1.2 million barrels a day a year ago.