Oil – OPEC and Russia Attempt to Adjust Production Cuts Ahead of June Meeting

OPEC Countries Are Considering Keeping Oil Production Cuts Until The End Of 2020, But Await Support From Russia

Some OPEC (Organization of the Petroleum Exporting Countries) member countries, including Saudi Arabia, are evaluating extending the current oil production cuts until the end of this year. However, they are awaiting a position from Russia to ensure the cuts.

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Last month, OPEC and its allies (OPEC+), led by Russia, reached an agreement to reduce oil pumping by 9.7 million barrels per day in May and June in an attempt to curb falling barrel prices due to oversupply and low demand from the global coronavirus crisis.

Now, instead of easing the cuts starting in July—as the pact forecasted—several OPEC+ sources told Reuters that discussions led by Saudi Arabia are underway to maintain the level of reductions.

“The Saudis understand that the market still needs support, and they want to extend the same cuts until the end of the year. The Russians also want the same, but the problem—again—is with the oil companies,” said an OPEC+ source.

Additionally, according to Reuters, Russia’s Energy Minister, Alexander Novak, met with major oil companies in the country on Tuesday to discuss the possibility of extending the current levels of cuts beyond June.

According to a source from a Russian oil company, referring to the pact that maintains the current cuts until June, “Of course, if we are told to continue with the cuts, we will comply. But if demand is okay, we see no reason to alter the agreement.”