OPEC decided to extend record oil production cuts by the end of July, after Russia and its allies pulled almost 10% of their global supply from the market and doubled crude oil prices in the past two months.
According to the draft of the meeting held as a video conference, the group known as OPEC + asked countries such as Nigeria and Iraq, which exceeded their quota in May and June, to compensate for extra cuts in July-September.
OPEC + initially decided in April that it would reduce supply by 9.7 million barrels (bpd) per day in May-June to support the collapsing prices due to the coronavirus crisis. These cuts fell to 7.7 million bpd from July to December.
Brent crude increased to a three-month high above $ 42 a barrel on Friday after falling below $ 20 in April. Prices are still one-third lower than the end of 2019.
The OPEC + draft said it would meet every month till December to review the market and advise on cuts. The next meeting is scheduled for June 18.
According to the two OPEC sources prior to the negotiations, a one-month extension has already been accepted for interruptions by members of the group. Riyadh is said to be considering extending it to August or even December.
Saudi Arabia, OPEC’s actual leader and Russia should take a balancing act to raise their oil prices to meet their budget needs, avoiding promoting the revival of rival US shale oil production, not to raise oil prices above $ 50 per barrel.
The US said it was satisfied with the price recovery provided by Russian and Saudi leaders prior to Saturday’s talks.
As global locking restrictions applied to stop the spread of coronavirus are reduced, while the oil demand was expected by OPEC to be higher than the supply in July, over 1 billion barrels of accumulated oil stock since March have not yet melted.
Nigeria said it supports the idea of compensating overproduction in May and June.
OPEC sources said that Iraq, which had one of the worst compliance rates in May, also accepted additional cuts, but did not make a clear statement on how Baghdad would agree to reduce the deal with oil majors in the country.
According to OPEC + data, Iraq produced 520,000 bpd, Nigeria 120,000, Angola 130,000, Kazakhstan 180,000 and Russia 100,000 bpd in May.