OPEC+ to meet on extending cuts

Will push laggards such as Iraq, Nigeria to comply with existing curbs

Reuters June 06, 2020
A Reuters file image of the Opec logo.

DUBAI/ MOSCOW: The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, will meet on Saturday to discuss extending record oil production cuts and to push laggards such as Iraq and Nigeria to comply with existing curbs.

The producers, known as OPEC+, previously agreed to cut supply by 9.7 million barrels per day (bpd) during May and June to prop up prices, which collapsed due to the coronavirus crisis. Cuts have been due to taper to 7.7 million bpd from July to December.

Two OPEC+ sources said Saudi Arabia and Russia had agreed to extend the deeper cuts until the end of July but said Riyadh was also pushing to extend them until the end of August.

“The conditions right now warrant hopefully successful meetings,” Saudi Energy Minister Prince Abdulaziz bin Salman told Reuters on Friday, adding that coordination was under way to hold the OPEC and OPEC+ meetings on Saturday.

Benchmark Brent crude, which slumped below $20 a barrel in April, was up about 3% on Friday to trade at a three-month high above $41. Prices had slipped earlier this week from recent highs on uncertainty about when OPEC+ would meet.

Saturday’s video conferences would start with talks between members of OPEC at 1200 GMT and would be followed by a gathering of the OPEC+ group at 1400 GMT, two OPEC+ sources said.

OPEC sources said an extension to cuts was contingent on high compliance. They said countries that produced above quota in May and June must promise to adhere to targets and compensate for any earlier overproduction by cutting more in July, August and September.

The energy minister of the United Arab Emirates, Suhail Al Mazrouei, called for improved compliance in a letter to OPEC+.

“As a representative of the UAE, I find it disappointing and unacceptable that some of the largest producers with capacity like (Saudi Arabia) and Russia comply 100% or more while other major producers do less than 50%,” he wrote in the letter.

Iraq, which had one of the worst compliance rates in May according to a Reuters’ survey of OPEC production, agreed to the additional pledge, OPEC sources said.

Published in The Express Tribune, June 6th, 2020.

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