OPEC+ may meet over oil cuts this week if laggards agree to comply

DUBAI/MOSCOW/LONDON – OPEC+ oil producers could still hold a ministerial video conference this week if Iraq and others which have not fully complied with existing supply cuts agree to boost their adherence, three OPEC+ sources told Reuters on Thursday.

The Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, are debating when to hold ministerial talks to discuss a possible extension of the existing cuts.

OPEC+ agreed to reduce supply by 9.7 million barrels per day (bpd) during May and June, after the coronavirus crisis hit demand. Oil prices have more than doubled after tumbling below $20 a barrel in April, but OPEC+ indecision about whether to prolong those record cuts has weighed since Wednesday. [O/R]

Saudi Arabia and Russia, the key OPEC+ players, want to extend the existing level of cuts, but a suggestion by OPEC’s current president Algeria to meet on Thursday was delayed amid talks about poor compliance by some producers.

“There are discussions between the ministers about the possibility of making up for poor May compliance in June and July,” one OPEC+ source said, declining to be identified. raq and Nigeria, both laggards in previous OPEC+ cuts, have shown lower compliance with the curbs implemented since May than OPEC producers in the Gulf, such as Saudi Arabia. [OPEC/O]

A ministerial conference could be called at short notice, possibly on Friday, if there was an agreement, the sources said.Riyadh was preparing for tough talks, said SEB analyst Bjarne Schieldrop.

“Not only are cheaters being pushed to fully comply with the deal going forward, but they are also asked to make up for what they did not deliver,” he said. “That sounds like a very tall order and our first reaction is this will never happen.”

Producers are relieved supply cuts have offset the drop in demand caused by lockdowns to prevent the coronavirus spreading. Demand is recovering as those restrictions are eased.

Russian Energy Minister Alexander Novak has said the oil market could face a shortage of 3 million to 5 million bpd in July, depending on the deal reached by OPEC+, Interfax news agency reported.

Kremlin spokesman Dmitry Peskov said President Vladimir Putin had no plans to speak to his U.S. counterpart Donald Trump or other heads of state on the issue, but said the oil market was stabilising in recent weeks.