Oil prices rose on the announcement that the countries want to extend the deal, which encompasses both nations in the Organization of the Petroleum Exporting Countries and some non-OPEC countries like Russia.
The Russian Energy Ministry says extending the cuts through March 31, 2018, would show “producers’ determination to ensure stability, predictability and incremental development of the market.”
Russia and Saudi Arabia will now hold consultations with other producers “with the aim of achieving complete consensus” on the extended production cuts before the scheduled OPEC meeting May 25 in Vienna.
The international benchmark for crude oil was up $1.25, of 2.5 per cent on the day, at $52.10 a barrel.
In late November, OPEC agreed to cut production by 1.2 million barrels a day, the first such reduction agreement since 2008. The following month, 11 non-OPEC oil-producing countries pledged to cut another 558,000 barrels a day, bringing the overall reduction to 1.8 million barrels a day.
Oil producers have been trying to boost prices, as crude futures trade around $50 a barrel, less than half their level from early 2014, though above the low of below $30 in early 2015.
The joint announcement by Russia and Saudi Arabia chimes with a statement Friday by major producers Iraq and Algeria, which argued for extending the cuts through the end of the year.
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Following the Russia-Saudi statement, Kazakh Energy Minister Kanat Bozumbayev said “Kazakhstan should follow the trend,” in comments reported by Russia’s RIA Novosti agency. However, Bozumbayev said Kazakhstan would find it technically difficult to keep output down because it started bringing a large new field online last year.
Azerbaijan said it would support a continuation of the cuts, in comments by Energy Ministry spokeswoman Zamira Aliyeva to the Interfax-Azerbaijan agency. There was no comment on Russia and Saudi Arabia’s March 31 date.