OPEC and its allies have coalesced around a one-month extension to their 9.7 million b/d collective production cuts beyond June, with key members Saudi Arabia and Russia aligned, though the date of a meeting to finalize a decision remains in flux, according to people involved in the talks.
OPEC kingpin Saudi Arabia is insisting on firm commitments from other members to stick to their production quotas, and those who have violated their caps are being pressured to overcomply in the coming months to make up for their excess barrels, OPEC+ sources told S&P Global Platts.
The OPEC+ alliance had floated moving forward the meeting to June 4 from its previously scheduled June 9-10, but no announcement has been made as the compliance discussions continue.
“Hopefully the [earlier] meeting will happen, but it’s not yet decided,” a source said.
Without an extension, the 9.7 million b/d in cuts are scheduled to roll back to 7.7 million b/d starting July 1 through the end of 2020.
Oil prices have rebounded — with front-month ICE Brent futures rising above $40/b in early trading June 3 — but are still far below desirable levels for many OPEC+ members, and with the global economy only just starting to recover, many members have pushed to maintain the deeper cuts.
Under the proposed one-month extension, OPEC+ ministers would meet monthly to review compliance and market conditions, the sources said.
Several of the six secondary sources used by OPEC to monitor output, including S&P Global Platts, have yet to report their May production figures.
But preliminary production and export data released by some countries have indicated uneven compliance so far, with Russia exceeding its cap by 100,000 b/d and Iraq reporting exports that nearly match its production quota.
Saudi Arabia itself, along with Gulf allies the UAE and Kuwait, have pledged additional cuts below their quotas for June, though it was unclear whether the countries would continue their overcompliance in an extension.