(Bloomberg) — Oil advanced above $43 a barrel in London after OPEC and its allies agreed to extend historic output curbs by an extra month, promising stricter compliance to ensure members don’t pump more than they pledged.Brent futures added 2.4% after posting a sixth weekly increase on Friday, the longest run of gains since May 2018. The extension is a victory for Saudi Arabia and Russia, which were deadlocked in a brutal price war just two months ago. The de-facto leaders of OPEC+ showed their commitment to shore up oil markets globally over the weekend, and even cajoled Iraq, Nigeria and other laggards to fulfill their promises to reduce production.Following the extension, Saudi Arabia made some of the biggest increases to the price of its crude in at least two decades. The steepest will hit July exports to Asia, while overall, the gains erased almost all of the discounts the kingdom made during its brief price war with Russia.Oil has doubled since April as OPEC+ cuts trimmed a global glut and demand staged a rebound after the easing of restrictions in some countries, particularly China. Still, a sustained recovery may be hampered by deteriorating relations between Washington and Beijing, a second wave of infections, or returning U.S. shale supply following a gain in crude prices.See also: Largest Libyan Oil Field Resumes Output Amid Push for Cease-FireOPEC+ agreed to cut output by 9.6 million barrels a day in July, 100,000 barrels a day less than this month as Mexico will end its supply constraints. Any member that doesn’t implement 100% of its curbs in May and June will make extra reductions from July to September to compensate.“The only potential Achilles heel, in what seemingly is an expected extension of current deep cuts through July, is the caveat of sub-compliant members requirement to compensate for lack of compliance,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, said in a note. “Countries such as Iraq and Nigeria will struggle, we believe, to compensate fully, which puts increased pressure on the coherence of the alliance.”The oil market “is still in a fragile state and needs support,” Russia’s Energy Minister Alexander Novak said in opening remarks at the virtual meeting on Saturday. The cartel will meet again in the second half of June for another review of the oil market.Saudi Arabia’s decision to boost its official selling prices for July also comes as China’s demand is rising. The month-on-month increase for its flagship Arab Light crude to Asia, which accounts for more than half of Saudi oil sales, is the largest in at least 20 years.Meanwhile, offshore drillers idled about a third of oil production in the U.S. Gulf of Mexico, amounting to about 636,000 barrels of daily output, due to Tropical Storm Cristobal, according to the Bureau of Safety and Environmental Enforcement.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — The Chinese behemoth that makes electric-car batteries for Tesla Inc. and Volkswagen AG developed a power pack that lasts more than a million miles — an industry landmark and a potential boon for automakers trying to sway drivers to their EV models.Contemporary Amperex Technology Co. Ltd. is ready to produce a battery that lasts 16 years and 2 million kilometers (1.24 million miles), Chairman Zeng Yuqun said in an interview at company headquarters in Ningde, southeastern China. Warranties on batteries currently used in electric cars cover about 150,000 miles or eight years, according to BloombergNEF.Extending that lifespan is viewed as a key advance because the pack could be reused in a second vehicle. That would lower the expense of owning an electric vehicle, a positive for an industry that’s seeking to recover sales momentum lost to the coronavirus outbreak and the slumping oil prices that made gas guzzlers more competitive.“If someone places an order, we are ready to produce,” said Zeng, 52, without disclosing if contracts for the long-distance product have been signed. It would cost about 10% more than the batteries now inside EVs, said Zeng, whose company is the world’s largest maker of the batteries.Concerns about batteries losing strength and having to be replaced after a few years is one factor holding back consumer adoption of EVs. Tesla last year flagged it expected to bring into production a battery capable of a million miles of operation, and General Motors Co. last month said it is nearing the milestone. That distance is equivalent to circling the planet 50 times.Anticipating a rapid return to growth for the EV industry, CATL is plowing research-and-development dollars into advances in battery technology. While the coronavirus outbreak will drag down sales throughout this year, EV demand will pick up in early 2021, said Zeng, who founded CATL a decade ago.Car buyers holding back during the pandemic is creating pent-up demand that will be unleashed starting next year, led by premium models, he said. CATL’s customers include BMW AG and Toyota Motor Corp.Zeng’s comments strengthen views that electric vehicles are set to weather the economic slowdown caused by the outbreak better than gas guzzlers. Battery-powered cars will swell to 8.1% of all sales next year in China, which accounts for the largest share of global EV sales, and to 5% in Europe, BNEF predicts.“The pandemic may have a lasting effect throughout 2020, but won’t be a major factor next year,” Zeng said. “We have great confidence for the long run.”CATL struck a two-year contract in February to supply batteries to Tesla, a major boon for the Chinese company as the U.S. electric-car leader has thus far mainly worked with Japan’s Panasonic Corp. and South Korea’s LG Chem Ltd. The deal followed months of negotiations, with Tesla Chief Executive Officer Elon Musk traveling to Shanghai to meet with Zeng.The CATL batteries are set to go into Model 3 sedans produced at Tesla’s massive new factory near Shanghai, which started deliveries around the beginning of this year. Batteries are the costliest part of an EV, meaning suppliers of those components have a chance to reap a lion’s share of the industry’s profits.Zeng said he often shares insights with Musk, with the two exchanging text messages about developments in technology and business. CATL is strengthening its relationship with Tesla, with matters such as cobalt-free batteries on their agenda, Zeng said.“We’re getting along well and he’s a fun guy,” Zeng said of Musk. “He’s talking about cost all day long, and I’m making sure we have the solutions.”Zeng said Musk also requested his help in obtaining ventilators for coronavirus patients. The U.S. billionaire delivered more than 1,000 of the breathing machines from China to officials in Los Angeles in March.Shares of CATL have advanced about six-fold in Shenzhen since its initial public offering in 2018, giving the company a market value of about $47 billion. Tesla, by far the most valuable EV maker, has a market capitalization of about $160 billion.A “trigger point” for electric cars will occur once they overtake gasoline-powered vehicles around 2030-2035, Zeng said. That view is more ambitious than that of researchers such as BNEF, which expects the shift to take place a few years later.CATL, which is adding a production facility in Germany, is set to make more than 70% of batteries required by BMW, an early customer, Zeng said. CATL also works with Volkswagen’s Audi unit and is cooperating with Porsche, he said.Zeng didn’t rule out building a plant in the U.S., though he said the company has no specific plans for now.“Our team has made achievements in competing with our global rivals in overseas markets,” Zeng said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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