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Little drama for OPEC meeting as Russia is the real power behind the scenes

After so much hype and anticipation, it seems that the OPEC meeting in Vienna was all but over before it had even begun. Russia and Saudi Arabia have agreed to extend the OPEC+ production cuts by six to nine months.

The production levels remains unchanged, but the timing could be extended through the first quarter of 2020.

“We will support the extension, both Russia and Saudi Arabia. As far as the length of the extension is concerned, we have yet to decide whether it will be six or nine months. Maybe it will be nine months,” Russian President Vladimir Putin said on the sidelines of the G20 conference in Japan.

Saudi officials sounded a little more certain. “I think most likely a nine-month extension,” Saudi oil minister Khalid al-Falih said. But when asked if the oil market needed deeper cuts, al-Falih said no. “I don’t think the market needs that,” he said.

Extending the cuts by nine months makes sense because of seasonally weaker demand in the early part of the year. In any event, the group will meet again in six months to reassess, so the precise duration of the extension is almost irrelevant.

That leaves little drama for the Vienna meeting. In fact, even as OPEC is supposed to work by consensus, al-Falih played up the notion that all important decision-making is taking place in Riyadh and Moscow. “The agreement confirms that the Saudi-Russian partnership paved the way to guarantee the interest of producers and consumers and the continued growth of the global economy,” al-Falih tweeted.

That didn’t go down well with the rest of the group. “Who needs an OPEC meeting?,” one irritated OPEC delegate said, according to Reuters.

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