OPEC+ oil cut extension is a victory for Saudi Arabia

  • OPEC+ agreed to a one-month extension of its record oil-production cuts and adopted a stricter approach to ensuring members don’t pump more than they pledged.

    The deal will underpin the oil market’s recovery, easing the financial pain felt by resource-dependent emerging economies, shale explorers in Texas, and blue-chip companies such as Royal Dutch Shell Plc.

    Brent crude prices could rise to as much as $50 a barrel from Friday’s closing price of $42.30, according to consultant Wood Mackenzie Ltd.

    It’s a victory for Saudi Arabia and Russia, who put a destructive price war behind them to cajole Iraq, Nigeria and other laggards to fulfill their promises to cut production. The two leaders of OPEC+ showed that they intend to keep a close watch on the oil market. The group’s monitoring committee will now meet every month to assess the balance between supply and demand amid an uncertain economic recovery from the global pandemic.