IF THEY DIDN’T TAKE ACTION THEY’D BE IN THE US$30S AGAIN.

Other analysts also think OPEC will extend the agreement.

Citi Group expects an extension “because the other option would be too painful for the Saudis and all others in the deal .... By that criterion it’s a done deal and the cuts get extended.”

In an interview with Bloomberg News last week Saudi Energy Minister Khalid Al-Falih said the cuts would be extended if crude stockpiles in June were above their five-year average. Meanwhile, Saudi royals are banking on much higher prices for the IPO of its massive state-run oil giant Saudi Aramco, which they say is scheduled for 2018. On Wednesday, Saudi Arabia also suffered a credit downgrade from Fitch Ratings to A+ on worsening public and external finances on the back of lower oil prices.

The cartel also has other headaches to contend with. Despite compliance being well above analyst expectations, OPEC member Iraq is causing concern over whether it will meet its respective targets.

The country has said it is counting exports rather than production as its key metric within the quotas, which goes against the OPEC agreement. Iraq has boosted its production, while OPEC members Libya and Nigeria, which are exempt from the cuts, have also increased output.

Croft said much of the uncertainty around Iraq production levels is due to a lack of consistency between heads of state and the energy ministry. However in Iraq, as elsewhere, she says leaders are still primarily concerned with avoiding another price rout, which should be supportive of an extension of the OPEC deal.

“Oil ministers talk about how this is all about fundamentals, not about price, but from the standpoint of the people running these countries I think they are very concerned about price,” she said.