By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies led by Russia will meet on Saturday, June 6 to discuss extending record oil production cuts.
The meeting will also be held to approve a new approach that aims to force laggard countries such as Iraq and Nigeria to comply better with the existing curbs.
The producers known as OPEC+ previously agreed to cut supply by 9.7 million barrels per day during May and June to prop up prices which collapsed due to the coronavirus crisis.
These record cuts have been due to drop to 7.7 million barrels per day from July to December, but there are now discussions to continue reducing cuts by current levels.
It was reported that Saudi Arabia and Russia had agreed to extend the deeper cuts until the end of July, with Saudi, the de facto OPEC leader, also pushing to extend them until the end of August.
Today’s meetings will start with talks between members of OPEC and be followed by a gathering of the OPEC+ group, an OPEC+ source said, after Algerian and Russian media reported the meetings.
As it stands, analysts note that an extension to cuts will fall on high compliance and countries that produced above quota in May and June must promise to adhere to targets and agree to compensate for any earlier overproduction by cutting more in July, August and September.
Iraq, which had one of the worst compliance rates in May, according to a Reuters survey of OPEC production, agreed to the additional pledge.
Iraq blamed technical reasons and a recent change in its government for weak compliance in May, another OPEC source said.
There have been no comment from Nigeria, but it had claimed it was compliant with cuts.
As at the time of this report, the international benchmark, Brent Crude climbed 3.03 percent on Friday morning to trade at a three-month high of nearly $41.16 per barrel. The US West Texas Intermediate (WTI) has also risen 2.4 percent to $38.23 per barrel.
Modupe Gbadeyanka