Saudi Arabia and several other members of OPEC are discussing the possibility of extending the current level of OPEC+ production cuts to the end of the year to support the market, but Russia could be the stumbling block again, Reuters reported on Thursday, citin8ug sources at OPEC+ and i9Russia’s oil industry.
The OPEC+ group pledged in April production restrictions of 9.7 million bpd in May and June, before easing the cuts to 7.7 million bpd for July through December.
According to Reuters’ sources, Saudi Arabia would like to see the deeper 9.7-million-bpd cut extended through the end of 2020 to rebalance the market.
OPEC and the OPEC+ group are expected to meet via teleconference on June 9 and 10 to discuss the market fundamentals and possible tweaks to the deal they forged in April to cut nearly 10 percent of global oil production to support the market while demand is weak during the pandemic.
“The Saudis see that the market still needs support and want to roll over the same cuts until end of the year. The Russians also want the same but the problem again is with the oil companies,” a source at OPEC+ told Reuters.
Russia, in its typical ‘wait-and-see’ approach, is non-committal and reportedly prefers to wait to see how much oil demand will recover.
Earlier this week, Russia’s Energy Minister Alexander Novak discussed with oil executives the possible extension of the current oil production cuts beyond June. Related: U.S. Hydropower Disaster Causes $1 Billion In Damages
According to a source familiar with the details of the meeting who spoke to Reuters, Russia’s oil companies failed to reach any agreement at the Tuesday meeting, as half of the firms supported the extension of the current cuts—which means Russia cutting production from around 11 million bpd to 8.5 million bpd—while the other half of the oil executives were against extending the deep cuts and calling for the easing of the cuts, as per the OPEC+ agreement.
Russia plans to stick to the OPEC+ deal reached in April and ease the cuts after June 30, Russian officials and industry sources told Bloomberg on Wednesday.
Meanwhile, Russia’s President Vladimir Putin had a telephone conversation with Saudi Arabia’s Crown Prince Mohammed bin Salman on Wednesday, during which “Both sides noted the importance of the joint efforts to reach the OPEC+ agreements on reducing oil production in April. They agreed to continue close coordination on this issue between the energy ministries,” the Kremlin said.
By Tsvetana Paraskova for Oilprice.com
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