The Organisation of Petroleum Exporting Countries (OPEC) has agreed to further extend the agreement to cut global oil production by 1.2 million barrel per day till April, 2018.
However, Nigeria and Libya were once again exempted from the cut due to domestic challenges already limiting the countries from producing to maximum level.
The decision was taken on Thursday after a joint meeting with 13 OPEC and 11 Non-OPEC countries, who held a meeting for the second time in history to achieve stable and balanced global oil prices.
The Saudi Arabian Minister of Energy, Industry and Trade, Mr Khalid al-Falih said that the groups’ decision was to sustain the success of the existing agreement.
Al-Falih who is the Chairman of the meeting said that the members unanimously agreed to allow Nigeria and Libya be excluded from cuts as their output remained curbed by unrest.
“We recognise and sympathise with the domestic challenges in Nigeria and Libya.
“We understand that they need all the assistance they can get. So we will give them plenty of room to grow. We will take the fall until they do.
“Therefore, we won’t impose a limit on Nigeria and Libya any time soon,” he said.
Al-Falih said that member countries also agreed to legalise the existing cooperation with non-OPEC countries to go beyond oil cuts.
Also, the Secretary-General of organisation Mr Mohammed Barkindo, said OPEC was working on establishing a relationship with shale oil producers in the hope of getting them to be part of the existing arrangement.
OPEC and non-OPEC countries on Nov 30, 2016 agreed to make a 1.8mbp cut, with OPEC countries making the biggest cut of 1.2mbp and non-OPEC, 600,000 barrels per day.
Until the extension, the agreement which took effect Jan 1, 2017 was expected to last until June 1, 2017.
A breakdown of the agreed oil production adjustment showed that Saudi Arabia was expected to make the largest contribution by cutting production by 486,000 b/d.
Also, Algeria is expected to reduce its output per day by 50,000, Angola, 87,000, Ecuador, 26,000, Gabon, 9,000, Iran, 90,000, Iraq, 210,000, Kuwait, 131,000, Qatar, 30,000, UAE, 139,000 and Venezuela by 95,000.
The cuts helped to push oil back above to 50 dollars per barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues.
However, the success of the cut is threatened by shale oil producers, who continue to operate unchecked, therefore flooding the market and driving down oil prices.
Meanwhile, Nigerian Petroleum Minister days the country is ready to accept OPEC production ceiling. However, the organisation has let the country out in its extended production cut.