OPEC, Russia discuss extending oil cuts for 1-2 months

OPEC and Russia are moving closer to a compromise on extending current oil output cuts and are discussing a proposal to roll over supply curbs for one to two months
Reuters Monday, 1 June 2020

OPEC and Russia are moving closer to a compromise on extending current oil output cuts and are discussing a proposal to roll over supply curbs for one to two months, OPEC+ sources told Reuters.

OPEC+ decided in April to cut output by a record 9.7 million barrels per day, or about 10% of global output, to lift prices battered by a demand drop linked to lockdown measures aimed at stopping the spread of the coronavirus.

Rather than easing output cuts in July, sources told Reuters last week that de-facto OPEC leader Saudi Arabia was leading discussions on sustaining them until the end of the year. However, it was yet to win support from Russia, which believes curbs could be eased gradually.

Another OPEC+ source said there was support for Russia’s proposal for an extension of one month, but “we still do not have consensus over it”.

The OPEC+ group is likely to hold an online meeting on June 4 to discuss output policy, after Algeria, which currently holds the presidency of the Organization of the Petroleum Exporting Countries (OPEC), proposed a meeting planned for June 9-10 be brought forward.

Reduced production from OPEC+, combined with a record decline in output from non-members such as the United States and Canada, have helped to lift oil prices towards $35 per barrel, but they remain at only half the level of the start of the year.