OPEC, allied nations extend nearly 10M barrel cut by a month

DUBAI, United Arab Emirates (AP) — OPEC and allied nations agreed Saturday to extend a production cut of nearly 10 million barrels of oil a day through the end of July, hoping to boost energy prices hard-hit by the coronavirus pandemic.

Ministers of the cartel and outside nations like Russia met via video conference to adopt the measure, aimed at cutting out the excess production depressing prices as global aviation remains largely grounded due to the pandemic. It represents some 10% of the world's overall supply.

However, danger still lurks for the market. Algerian Oil Minister Mohamed Arkab, the current OPEC president, warned attendees that the global oil inventory would soar to 1.5 billion barrels by the mid-point of this year.

“Despite the progress to date, we cannot afford to rest on our laurels,” Arkab said. “The challenges we face remain daunting.”

That was a message echoed by Saudi Oil Minister Abdulaziz bin Salman, who acknowledged “we all have made sacrifices to make it where we are today.” He said he remained shocked by the day in April when U.S. oil futures plunged below zero.

“There are encouraging signs we are over the worst,” he said.

Russian Energy Minister Alexander Novak similarly called April “the worst month in history” for the global oil market.

The decision came in a unanimous vote, UAE Energy Minister Suhail al-Mazrouei wrote on Twitter. He called it a “a courageous decision and a collective effort deserving praise from all participating producing countries.”

Crude oil prices have been gaining in recent days, in part on hopes OPEC would continue the cut. International benchmark Brent crude traded Saturday over $42 a barrel. Brent had crashed below $20 a barrel in April.

The oil market was already oversupplied when...