Brent Crude prices broke above $40 a barrel early on Wednesday, surpassing that threshold for the first time since Saudi Arabia and Russia broke up the previous OPEC+ pact on March 6 and started an oil price war for market share.
Later on Wednesday, oil prices slipped following reports that non-compliant OPEC+ members in the new round of record production cuts could threaten the group's meeting this month. OPEC+ was said to be considering holding an earlier-than-planned meeting on June 4, instead of on June 9 and 10.
But a June 4 meeting is not happening, and next week's meeting is also in limbo, unless laggards in compliance promise to stick fully to their quotas, sources familiar with the talks told Bloomberg on Wednesday.
As of 9:26 a.m. EDT, oil prices had retreated and Brent Crude was down 0.88 percent at $39.22, while WTI Crude was down 0.22 percent on the day to $36.73
The leaders of the OPEC+ pact-Saudi Arabia and Russia-have agreed in principle to roll over the current level of the cuts of 9.7 million bpd for another month after June, provided that the laggards in compliance ensure over-compliance going forward to compensate for flouting their quotas so far, OPEC sources told Reuters on Wednesday. This does not mean that the whole group has signed onto longer cuts. Related: Offshore Oil Is On The Brink Of Collapse
The laggards in compliance are the usual OPEC suspects Iraq and Nigeria, as well as non-OPEC's Kazakhstan.
Russia, which has far-from-perfect track record in compliance with previous cuts, seems to be highly motivated to comply this time, with its May crude oil production at 8.59-8.69 million bpd, very close to its 8.5-million bpd production cap under the deal, sources with knowledge of the data told Reuters earlier this week.
While oil prices were volatile on Wednesday on various reports about what would OPEC+ do next, there is no doubt that improving oil demand from the early April-lows as well as production cuts from OPEC+ and economics-driven curtailments in North America have helped WTI Crude oil prices register their best-ever monthly performance in May.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More