Saudi Arabia and Russia, the world’s top two oil producers, agreed on Monday on the need to extend output cuts for a further nine months until March 2018.
Saudi Energy Minister, Khalid al-Falih, and his Russian counterpart, Alexander Novak, said in a statement that they would “do whatever it takes” to reduce the inventory overhang.
“There has been a marked reduction to the inventories, but we’re not where we want to be in reaching the five-year average,” Mr. al-Falih told a news conference in Beijing alongside Novak.
“We’ve come to the conclusion that the agreement needs to be extended.”
The Organisation of the Petroleum Exporting Countries meets in Vienna on May 25 to consider whether to extend output cuts agreed in December 2016 between OPEC and 11 non-member countries, including Russia.
Benchmark Brent oil prices due to the agreement rose above $52.23 per barrel 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.