Adds detail throughout
Opec finalised an agreement to extend production cuts through the first quarter of 2020 ahead of tomorrow's 6th Opec and non-Opec ministerial meeting.
Non-Opec producers, led by Russian energy minister Alexander Novak, are expected to follow suit and confirm their commitment to extend cuts over the same period at the full ministerial gathering scheduled for 10am local time tomorrow.
"In view of the current fundamentals and the consensus view on the outlook for the remainder of 2019, the conference decided to extend the voluntary production adjustments… for an additional period of nine months from 1 July 2019 to 31 March 2020," Opec said in its final communique.
Opec and its allies, collectively known as Opec+, committed to constrain production by a combined 1.2mn b/d through the first quarter of 2020, with Opec providing cuts of 810,000 b/d and non-Opec countries by 380,000 b/d.
Since the group's last meeting in December, the Opec Secretariat has made a downward revision to its global oil demand growth forecast for 2019, lowering it to 1.14mn b/d at present.
The agreement between US president Donald Trump and his Chinese counterpart Xi Jinping to resume trade talks, brokered on the sidelines of the G20 summit last week, has removed a major source of uncertainty over global demand.
The Opec Secretariat also sees non-Opec supply gaining by 2.14mn b/d in 2019 on a year-on-year basis, driven by expectations of strong production in the US.
Saudi oil minister Khalid al-Falih later shed some doubt over the resilience of the spike in US production: "I have no doubt in my mind that US shale will peak and decline," he said.
In addition to the extension of the deal, Opec members finalised the draft text of a long-planned charter to formalise their co-operation with their non-Opec partners moving forward. The framework will now be submitted for the governmental or parliamentary approvals of each member country.
The charter emerged as a contentious proposal during the meeting.
Prior to the assembly, Iran's oil minister Bijan Namdar Zanganeh said he fully supported the extension of the production cut agreement, but added that he would reject any move to formalise the charter now, given the continued political tensions between Tehran and some other Mideast Gulf members.
"It is not the time to discuss… these kinds of matters," Zanganeh said. "When inside Opec we have a lot of difficulties, it is not meaningful to discuss… new co-operation between Opec and non-Opec."
After several hours of difficult negotiations, some concessions were made to ultimately bring Iran on board, Opec secretary-general Mohammed Barkindo – who has been reappointed to a second three-year term starting from 1 August – told Argus.
One of the adjustments was to assure the "Opec+ charter does not supersede the Opec statutes itself," al-Falih said, adding this was introduced in the resolution for the Opec decision. The second amendment added language about financial contributions by non-Opec members.
Zanganeh echoed this sentiment upon leaving the meeting: "We discussed so much and we modified some aspects of the charter's text. Thankfully all the changes we wanted were made," he said.
Opec will review the text of the charter with its non-Opec allies at the upcoming Opec+ meeting, scheduled for the morning of 2 July.
The next ministerial Opec and Opec+ meetings have been scheduled for 5 and 6 December, respectively.
