Bids to extend current Opec+ cuts may face opposition

 

Petrotahlil - Early proposals from some Opec+ member countries to extend current production quotas beyond June could face resistance at next month's virtual meeting, delegate sources tell Argus.

 

The first phase of the Opec+ output restraint agreement calls for the removal of 9.7mn b/d of crude from the market in May-June, moderating to 7.7mn b/d across the second half of the year, largely from an October 2018 baseline.

 

Some Opec members are discussing an informal proposal to extend the current 9.7mn b/d of cuts beyond June but have yet to present this to all countries, Opec+ delegates said.

 

An extension beyond June would be merited on account of the economic impact of low oil prices on member countries and would "benefit" the oil market, one delegate said, but added this has not been discussed between experts and ministers.

 

Other Opec+ sources expect resistance from some member countries such as Russia, which blocked proposals for deeper cuts during a 5-6 March meeting in Vienna.

 

The proposal to extend current production quotas may have originated from Mideast Gulf producers, Opec+ delegates suggested.

 

Saudi Arabia, Kuwait and the UAE have all made pledges to deepen crude production cuts beyond their Opec+ commitments in June, in an effort to further support a recovery in oil prices. The Saudi oil ministry said it has directed state-controlled Saudi Aramco to reduce production to 7.49mn b/d next month, 1mn b/d below the country's June quota.

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