— This is the script of CNBC's news report for China's CCTV on July 1, 2019, Monday.
After Saudi Arabia first suggested extending the cut deal, Russia quickly backed it, the latest news is that Iraq has joined the chorus in defending oil prices, agreeing to extend production cuts. So, before the OPEC meeting, major members had sent a strong message that they did not want to see oil prices fall
There are two main reasons given by Russia for considering extending the deal: first, America's supply of crude oil is increasing, second, responding to the global slowdown.
At present, there is no agreement on when the agreement will be extended, OPEC delegates will meet today and tomorrow to discuss further details of the cuts. But the Saudi and Russia are now giving estimates of six to nine months, with a high probability of nine months.
If we count a nine-month basis, then that would mean the cuts agreed from 2017 would be extended until March. That would reduce supply to the international oil market by 1.2 million barrels a day. As a result, OPEC's share of the global market is expected to fall below 30 per cent once this deal is reached, hitting its lowest level since 1991.
So we saw the international prices increasing after the message of extending cuts deal released. Brent crude is currently trading around $66 a barrel.
Brent prices have risen by more than 25% since the start of the year.
But when it comes to the impact on oil prices, even before the OPEC meeting, many analysts pointed out that the G20 summit would have an even bigger impact than OPEC.
And the information we received over the weekend suggests that the trading environment will stabilize, which will ensure steady growth of the global economy, supporting oil demand and international oil prices.
Another big factor that cannot be overlooked in the oil price is the Iran's situation. Related countries promised to normalize trade in Iran on last weekend and that may soften some of the impact on oil prices.
Emmanuel Macron
President of the French Republic
What I have to say is that from the very beginning till a very recent time, the Iran following all the records that made by the international agency, deep behaved properly they followed. Now because of increased sanctions, they threatened to move slightly differently. This is a big risk. What we will do in such a case isn't to move directly to sanctions, but to act precisely following the treaty we signed in 2015.
Iran, a major OPEC member, has yet to say anything about the deal, there is no doubt that Iran will be in the global spotlight at the OPEC meeting. We will keep an eye on this issue.