DUBAI: Ƶ and Russia have reached agreement on extending their oil output cuts and are taking a firm line with other producers to keep their pledges.
Ahead of a meeting of OPEC+, the two biggest producers in the alliance are telling others they must adhere to agreed production guidelines or risk a return to the market chaos of April, when some oil prices hit all-time lows.
An official at one Opec delegation told Arab News an agreement was in place between Ƶ and Russia to extend the historic 9.7 million barrel cuts deal for at least one month, with a regularly monthly review— but it was contingent on all OPEC+ countries keeping their promises on current production levels.
“There is no dispute between Ƶ and Russia on this,” the official said. “They are sticking by the rules, and they want to put pressure on to make all OPEC+ members do the same.”
Most other OPEC+ countries are believed to be willing to stick by the April cuts for an extended period. Nigeria and Iraq are considering the proposals for stronger compliance.
A “virtual” OPEC+ meeting could still go ahead at short notice, or could take place on June 9 as originally scheduled. Ƶ has additional bargaining leverage in the 1 milion extra barrels it cut voluntarily, which could be reinstated at the end of this month
Crude prices, which topped $40 a barrel for Brent this week partly on hopes that the cuts would be extended, reflected the late uncertainty, and slipped back to just over $39.
Oil experts do not expect the negotiations over compliance to derail a long term OPEC+ deal. “Compliance is always an issue, but all will want to avoid any instability,” said Robin Mills, chief executive of Qamar Energy consultancy. “It’s quite an achievement to get to $40 from where they were a few weeks ago.”
