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Oil Higher Ahead Of This Week's OPEC Meeting

Jayson Derrick

Brent and U.S. crude futures were each higher by more than 2% Monday morning ahead of expectations for OPEC to extend an oil output cut.

What To Know

OPEC and its allied nations will gather in Austria Monday and Tuesday with a key topic of conversations the extension of the 2017 production cuts. The major oil producers are for the most part unanimous on the extensions.

Saudi Arabia's energy minister said most of the OPEC members want a nine-month extension of supply cuts, CNBC reported. Iraq's oil minister told reporters he isn't expecting any complications in reaching a resolution. Similarly, Iran's oil minister said it will be an "easy meeting."

Russia, a key non-OPEC oil giant, is also lending its support. Russian President Vladimir Putin said his country will "support the extension" for at least six months and up to nine months.

Why It's Important

Iran wants to see higher oil prices so it's unlikely to oppose any agreement even if it means siding with its rival Saudi Arabia. However, Iran also cautioned it believes OPEC is "on the verge of collapse" due to "unilateralism" among some OPEC members.

"They would support it going deeper in terms of a cut but they did declare that they are opposed to this charter arrangement which would formalize the non-OPEC and OPEC agreement," Helima Croft, head of global commodities strategy at RBC told CNBC.

The OPEC meeting will last through Tuesday and any final deal will remain subject to approval from non-OPEC members.

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