BEIJING: Saudi Arabia and Russia, the world’s two top oil producers, agreed on Monday on the need to extend oil output cuts for a further nine months until March 2018 to rein in a global crude glut, pushing up prices.

Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak said in a statement they would “do whatever it takes” to reduce the inventory overhang, using a phrase coined by European Central Bank President Mario Draghi five years ago in his successful bid to defend the euro.

The Organisation of the Petroleum Exporting Countries meets in Vienna on May 25 to consider whether to extend output cuts agreed in December last year between Opec and 11 non-member countries, including Russia.

Benchmark Brent oil prices rose 3 per cent, moving above $52 per barrel by 1245 GMT as the market had previously expected the cuts to be extended by as little as six months.

With a nine-month extension now the minimum expectation for the Opec meeting, the group has a lot of work to do to persuade its members and some non-Opec producers to back the move.

Opec member Iraq, whose production is growing fast, has said it would support renewing the deal only for six months.

Non-Opec member Kazakhstan said on Monday it would struggle to join any new deal on the old terms, as its own output was set to jump. Oman said it fully supported the idea of a nine-month extension.

Opec wants to reduce global oil inventories to their five-year average but so far has struggled to do so. Stockpiles are hovering near record highs, partly because of rising production in the United States, which is not part of the existing deal.

“There has been a marked reduction to the inventories, but we’re not where we want to be in reaching the five-year average,” Falih told a briefing in Beijing alongside Novak.

“We’ve come to the conclusion that the agreement needs to be extended.”

Published in Dawn, May 16th, 2017