MOSCOW/DUBAI/LONDON (Reuters) – OPEC, Russia and their allies hold talks on Saturday on extending record oil production cuts that have doubled oil prices since April and will push countries such as Iraq and Nigeria to deliver better compliance with output quotas.
FILE PHOTO: A 3D printed oil pump jack is seen in front of displayed stock graph and Opec logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/File Photo
Nigeria’s oil minister said he expected an extension deal, which already has the backing of Russia and Saudi Arabia, to be concluded in the video conference despite “reservations of one or two member countries,” which he did not name.
The alliance known as OPEC+ previously agreed to cut supply by a record 9.7 million barrels per day (bpd) during May-June to prop up prices that collapsed due to the coronavirus crisis. Cuts were due to taper to 7.7 million bpd from July to December.
An OPEC source said OPEC+ was expected to agree to extend deep cuts throughout July, while the situation would be reviewed later in June to decide on any further extension.
Riyadh had been considering an extension to August or even December, OPEC sources had said before the talks.
Saudi Arabia, OPEC’s de facto leader, and Russia have to perform a balancing act of pushing up oil prices to meet their budget needs while not driving them much above $50 a barrel to avoid encouraging a resurgence of rival U.S. shale production.
Graphic: OPEC+ Cuts for May and June – here
Global benchmark Brent crude LCOc1, which slumped below $20 a barrel in April, rose nearly 6% on Friday to end at a three-month high above $42. That is still more than a third less than the price of oil at the end of 2019.
Trump, who previously threatened to pull U.S. troops out of Saudi Arabia, spoke to the Russian and Saudi leaders before Saturday’s talks, saying he was happy with the price recovery.
Saturday’s talks start with discussions between members of the Organization of the Petroleum Exporting Countries at 1200 GMT, followed by OPEC+ talks at 1400 GMT, OPEC said on Friday.
“A formal announcement of a roll-over of the April 12 decision is expected to be made, the reservations of one or two member countries notwithstanding,” Nigeria’s minister of state for petroleum resources, Timipre Sylva, said in a statement.
OPEC sources said an extension was contingent on compliance as countries that produced above their quota in May and June must compensate by cutting more in future months.
Nigeria’s petroleum ministry said Abuja backed the idea of compensating for its excessive output in May and June.
Iraq, which had one of the worst compliance rates in May, also agreed to additional cuts, OPEC sources said, although it was not clear how Baghdad would reach agreement with oil majors in the country on curbing output. [OPEC/O]
Reporting by Vladimir Soldatkin and Olesya Astakhova in Moscow, Rania El Gamal in Dubai, Alex Lawler and Ahmad Ghaddar in London, Libby George in Abuja, Ahmed Rasheed in Baghdad; Writing by Dmitry Zhdhannikov; Editing by Edmund Blair