OPEC a non-member oil producers have announced plans to extend a global supply cut deal agreed in December until at least the end of 2017.
This comes after brent crude hit a six-month low of $46.64 last week amid a persistent glut driven by booming US shale oil production. Seeking to calm market Saudi energy minister Khalid al-Falih has said the coalition is ready to do “whatever it takes” to return stocks to levels five years ago.
The extension encapsulates the deal’s failure to meet is core objective of boosting depressed prices. Despite an initial uptick seeing Brent crude breach the mid-fifties in January they have remained volatile, and are now effectively back to where they were before the agreement.
All of this is bad news for big African producers like Nigeria and Angola, which have seen growth and investment hit hard and their reform efforts stifled by the commodities slump.
The International Energy Agency’s monthly outlook on oil demand is due on Tuesday. Oil exporters will be watching closely, hoping it could signal an end to the supply glut. Any reprieve looks likely to be temporary.