Russian Federation and Saudi Arabia Commit to Oil Cuts Through Next Year

The two countries agreed that current cuts should be prolonged for at least another nine months, taking it to March 2018.

Russian Federation and Saudi Arabia are going to hold consultations with the parties to the deal before May 24, according to the joint statement of the two countries.

And on Tuesday, Kuwait said it "gives its full backing and support to. extend the oil output cuts deal between OPEC and other producers until March 2018".

Venezuela is undergoing a wave of unrest with protesters angry at an economy in crisis, with food and medicine shortages and soaring inflation.

Saudi Arabia is the largest contributor among members of the Organization of Petroleum Exporting Countries to an agreement to balance an oversupplied market with managed production declines.

"I feel optimism because our main partner in this process, and our main partner without doubt is Saudi Arabia, has fully implemented all the agreements that took place up to now, and secondly, Saudi Arabia wants to maintain stable and fair prices for oil", Putin said.

Global benchmark Brent crude settled up 98 cents, or 1.9 percent, at $51.82 a barrel, having touched $52.63, the highest since April 21.

"Today's announcement will likely further extend the oil price rebound started last week on decent stock draws and low positioning, although the rally so far today has remained modest compared to the move that occurred past year when the OPEC cuts were first announced".

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But one major unknown will be the response of low-priced USA shale producers, which could undermine the unified effort to prop up the market.

Still, global oil supply and demand almost realigned in the first quarter after a almost three-year oversupply, and the oil stuck in storage tanks around the world shrank by 1 million barrels a day in March, the IEA said.

Woods also said that oil supplies would likely remain plentiful despite an extended cut.

Prices are up by 2.3 percent since the announcement of the planned extension on Monday, compared with an over 15 percent jump in the two days following the announcement of the initial cut on November 30, 2016.

"However, we'll see whether the rebound remains until the United States market opens".

The effects of these talks have has a substantial effect on the oil price.

Under the agreement, Opec countries were to cut production by 1.2 million barrels a day, while the Russian-led non-Opec nations agreed to reduce output by 600,000 barrels a day.

On the demand side, The IEA reiterated its forecast rate of growth at 1.3 million bpd for this year, to a total 97.9 million barrels, although over the first half of the year demand will grow more slowly because of India, the U.S., Germany, and Turkey.

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