OPEC moves towards output cap extension as meeting kicks off

OPEC and its oil-producing allies shifted Monday towards extending their daily output caps, sending oil prices racing higher before the outcome of the cartel's official gathering.

Ministers from the 14-nation Organisation of the Petroleum Exporting Countries (OPEC) met in Vienna to discuss output, before gathering a day later for OPEC+ -- which is a grouping of 24 oil-producing countries that includes Russia and together accounts for almost half of global crude.

The enlarged crude producing club had already decided in December to remove 1.2 million barrels per day from the market to bolster prices and soak up excess supplies.

Russian President Vladimir Putin and Saudi Arabia agreed on Saturday to extend the deal by between six and nine months, but the move provoked consternation from some quarters.

The news nevertheless fired New York oil prices above $60 per barrel, with sentiment boosted also by the China-US trade truce agreed at the G20 in Osaka.

"Everyone supported the proposition to extend for nine months the limits agreed in December," said Russian Energy Minister Alexander Novak ahead of the cartel's main meeting.

Saudi Arabia's energy minister Khalid al-Falih was meanwhile swift to deflect criticism from archfoe Iran that OPEC could "die" in the face of Riyadh and Moscow's Osaka deal.

Falih told reporters before OPEC's main meeting: "I think OPEC is more vibrant than ever. As Mark Twain said once, the reports of OPEC's death have been repeated many times, and every time it was ... greatly exaggerated.

"We believe that oil as a commodity is unique. It's the blood of the global economy. Ideally every producer should be around the table with us today."
He added: "Saudi Arabia and Russia are the largest producers, we are delivering the largest cuts, we (...) agree first and then discuss our agreement with our colleagues from other countries."
Kuwait's Oil Minister Khaled Ali Al-Fadhel concurred, adding: "Because of the positive outcomes of the G20... we are feeling more and more confident that things are looking better from now."