Saudi Arabia and Russia, key parties of the OPEC+ deal, are reportedly willing to support a rollover of the alliance’s oil production cuts for at least a month, as crude demand has not fully recovered from the coronavirus crisis.
The Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers, known collectively as OPEC+, are set to meet on Wednesday and Thursday to decide if the existing production curbs should be prolonged further. According to a Reuters source, the de-facto leader of the OPEC, Saudi Arabia, may support keeping the overall production unchanged in May and June. The kingdom could also extend its own voluntary cuts, the report said.
The possibility of extending oil cuts for another month was also confirmed to RIA Novosti by a source from one of the delegations. It told the agency that Riyadh had been in talks with other partners, and they had signaled their readiness to keep existing output curbs in place.
One of the main non-OPEC parties of the deal, Russia, could also support keeping production in the alliance unchanged. However, it is reportedly set to ask for a small output hike for itself to meet the seasonal demand.
The same move – letting both Russia and Kazakhstan slightly boost production while keeping the overall curbs – was agreed during the last OPEC+ meeting on March 4. Back then the alliance decided to keep output cuts at around seven million barrels per day. Saudi Arabia is additionally withholding from the market around one million barrels per day through its voluntary curbs.
The decision not to put more oil into the market could be based on still-weak demand for the commodity, as Covid-19 is still triggering lockdowns across the world. “They don’t see demand as yet strong enough and want to prevent prices from falling,” Reuters reported on Monday, citing a source briefed on the matter.
Oil prices have seen wild swings since the previous OPEC+ talks in early March, with Brent prices falling from nearly $70 per barrel to just above $60 per barrel last week. On Tuesday, two days before 23 OPEC+ ministers meet again, oil was trading slightly lower, with both Brent and US West Texas Intermediate (WTI) down around 0.2%.
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