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OPEC’s oil producers from the Persian Gulf are not in a rush to increase production in July despite the fact that the current agreement expires at the end of June and the cartel and allies will discuss their future oil policy in the first days of July.
The Gulf oil producers—Saudi Arabia, Kuwait, and the United Arab Emirates (UAE)—will keep their July production within the limits set by the current deal expiring in June, OPEC sources told Reuters on Thursday.
The Saudis are pumping in June at around the same rate as in May, while their production in July will continue to comply with the current production cut deal, Reuters’ sources said.
OPEC’s de facto leader and largest producer Saudi Arabia pumped 9.69 million bpd in May, according to OPEC’s secondary sources, while under the deal, the cap for the Kingdom is 10.311 million bpd. Kuwait and the UAE also over-complied with their share of the cuts in May, though in much smaller proportions than the Saudis.
Earlier this week, The Wall Street Journal reported that Saudi Arabia is cutting its oil production even deeper this month as concerns over oil demand growth have intensified. The Saudis are also asking other producers to follow and restrain production, OPEC officials told The Journal.
While the Gulf producers Kuwait and the UAE will follow the Saudi’s lead, the biggest unknown at the OPEC+ meetings rescheduled for July 1-2 is whether non-OPEC Russia will continue to play ball and agree to roll over the cuts.
“Russia is the only country that is yet to decide,” an OPEC source told Reuters today, confirming comments from Saudi Energy Minister Khalid al-Falih from earlier this month that “a rollover is almost in the bag” for OPEC, but the cartel has yet to discuss the pact with the non-OPEC producers led by Russia.
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.