VIENNA – The Organization of the Petroleum Exporting Countries sealed a long-term cooperation pact with Russia on Tuesday, extending a partnership set up two years ago to fight a surge of US oil that has upset the cartel’s pricing power, OPEC officials said.
The 14 crude-producing nations of the OPEC and a Russia-led group of 10 countries also completed a nine-month agreement to curb oil production by a combined 1.2 million barrels a day, rolling over a previous deal, officials said.
The pact ensures that the so-called OPEC+ coalition will continue coordinating on oil production once the current deal to curb output ends in nine months. The coalition’s aim is to prevent inventory buildup and keep prices at a higher level to balance member nations’ government budgets.
The OPEC+ group had agreed to a six-month round of output cuts in December that lifted oil prices by as much as 22 percent by April. But recent Middle East tensions that threaten oil supplies have been offset by worries about the global economy, sending oil prices into a tailspin that is nearing a bear market.
The long-term deal was struck after Saudi Arabia and the United Arab Emirates lobbied others within OPEC and the Russia-led group to get behind it – despite US opposition. Iran initially objected to the partnership, but Emirati energy minister Suheil el-Mazroueil and his Saudi counterpart Khalid al-Falih wanted to get the deal completed on the OPEC side on Monday, a Saudi adviser said.
“They saw it as their legacy and feared it would never be signed” if it was delayed, the adviser said.
On Monday, Falih took the rare step of holding a lengthy private meeting with an Iranian oil official to tackle Tehran’s objections, according to OPEC officials.
The partnership was formalized, despite US State Secretary Mike Pompeo saying Washington would use its Saudi and Emirati allies to scuttle the pact with Moscow.
Russian President “Vladimir Putin would love that, and it’s not going to happen under President Trump,” Pompeo told Fox News in February. “The partnerships we’ve developed throughout the Middle East are deep and strong.”