OPEC+ to meet on Saturday to discuss extending historic cuts
OPEC member Saudi Arabia and its ally Russia will try to push laggards such as Iraq and Nigeria to comply with curbs.
05 June 2020 GMT+3
The Organization of the Petroleum Exporting Countries 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+ had previously agreed to cut supply by 9.7 million barrels per day (bpd) during May and June to prop up prices that collapsed due to the coronavirus crisis. Cuts have been due to taper to 7.7 million bpd from July to December.
Oil gains on signs of improving demand, drawdown in inventory
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 news agency 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 more than 5 percent on Friday to trade at a three-month high above $42. 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 the OPEC at 12:00 GMT and would be followed by a gathering of the OPEC+ group at 14:00 GMT, OPEC said on Friday.
Three 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 percent or more while other major producers do less than 50 percent,” he wrote in the letter seen by Reuters.
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.
“The Saudis have been pushing Baghdad hard to comply,” one OPEC+ source said. “Iraq has agreed to the pledge to improve its full compliance with the cuts.”
Baghdad blamed technical reasons and a recent change in its government for weak compliance in May, another OPEC source said.
It was not clear how exactly Iraq would agree with oil majors working on its territory to reduce output further. The country is yet to assign a new oil minister with the finance minister also performing the role of acting oil minister.
Nigeria said in a statement earlier this week it had made “concerted efforts to adhere to [its cut] commitment and will continue to do so unequivocally”. The country aims to reach full compliance by the end of the month, the country’s Minister of State for Petroleum Resources Timipre Sylva said, adding that they measured their compliance in May at 52 percent.
Mexico, which resisted pressure by other OPEC+ members to cut output by 23 percent or 400,000 bpd, agreed to cut output by 100,000 bpd only for May and June at the April meeting. President Andres Manuel Lopez Obrador said on Friday his country was not in a position to make any additional cuts, but that Energy Minister Rocio Nahle would be taking part in the OPEC+ meeting.
The OPEC+ technical and ministerial committee meetings, which review the market and usually make recommendations on policy, were now scheduled for June 17 and 18, OPEC+ sources said.
Oluwatoyin Luqman Bolakale is a graduate of Telecommunications Science, A Certified and etch network security specialist from International cyber security institute and specialised in Network security, mobile and wireless communications, He is a community developer and An Online Media Practioner currently the CEO/Publisher of Satcom Media
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