OPEC+ to discuss extending cuts as early meeting seen

OPEC+ will discuss a short extension of their production cuts at a meeting that looks set to be held sooner than planned.

The virtual gathering will focus on a proposal, favoured by Saudi Arabia and its Gulf allies, to maintain record output curbs for an extra one to three months, one delegate said.

But two days after the idea of bringing forward the meeting by a few days to June 4 was first floated, delegates still hadn’t settled on the new date.

“The Saudis are clearly looking for support from other members to keep production levels lower for longer,” Amrita Sen at consultant Energy Aspects Ltd., told clients in a note.

Any changes to the existing deal — struck in April as energy demand and prices collapsed because of the coronavirus pandemic — will hinge on negotiations between Moscow and Riyadh. Russia has indicated it wants to start easing the cuts next month as planned, yet the two countries have also pledged to co-ordinate.

When asked about the Kremlin’s stance, spokesman Dmitry Peskov told reporters on a conference call on Monday: “Let’s not get ahead of ourselves.” Later in the day, the Russian government said in a statement that President Vladimir Putin and Donald

Trump discussed the OPEC+ deal and its role in stabilizing oil prices.

Oil prices have rallied as the output curbs coincided with a stronger-than-expected rebound in demand. But with lockdowns easing across the globe, fears that the pandemic could have a second wave make predictions of a recovery perilous. At about US$35 a barrel, prices are below what most producers in OPEC need to cover planned government spending.

Oil futures steadied on Monday as rising U.S.-China tensions weighed on sentiment, but prices drew support from the reports of an extension of output cuts. Brent futures rose 48 cents, or 1.3 per cent, to settle at US$38.32 a barrel. U.S. crude fell 5 cents, or 0.1 per cent, to settle at US$35.44 a barrel.

To ensure OPEC+ responds quickly to developments, meetings of either the entire group or the ministerial committee that oversees its deal could occur as often as every month over the summer, said another delegate.

An earlier meeting date would give the oil cartel more flexibility to change its current production limits. OPEC members usually decide their plans for shipping oil to customers for July in the first week of June.

The 23-nation coalition of OPEC and its allies committed to lowering output by 9.7 million barrels a day, or about 10 per cent of global supply, in May and June. In addition, Saudi Arabia, Kuwait and the United Arab Emirates made further voluntary cuts of about 1.2 million barrels a day for June, bringing the total OPEC+ curbs to almost 11 million barrels a day.