Top global oil producers of the Organisation of Petroleum Exporting Countries, OPEC, and Russia-led oil-producing nations alliance known as OPEC+ reviewed its compliance with oil cuts to support global oil prices amid the coronavirus pandemic.
A Committee of key officials from OPEC and Russia led OPEC+ countries on Wednesday at a video conference urged counterparts to remain disciplined in adhering to their committed production cuts.to discuss their approach to the market.
“As we go forward, we should strive to achieve full adherence to our agreement. Not only does this accelerate the rebalancing of global oil markets, but it also sends out a serious message that there is a new spirit of determination and discipline in our group,” Prince Abdulaziz bin Salman, Saudi Energy Minister said at the meeting.
The alliance implemented by OPEC and OPEC+ is the largest coordinated production cut in the oil market’s history in May at 9.7 million barrels per day which is about 10 per cent of pre-pandemic demand.
After global crude oil prices fell due to the impact of COVID-19 on the global economy, and also the short-lived price war in April after OPEC+ had initially failed to agree on a production supply accord.
Prices have been sustained around $45 per barrel in recent weeks, and the coalition has eased its cuts to 7.7 million barrels per day from August through the end of the year, in anticipation of higher demand.
The world is expected to reach about 97 per cent of pre-pandemic oil demand in the fourth quarter, Prince Abdulaziz said, based on the projections from analysts in the International Energy Agency, the US Energy Information Administration, OPEC and other forecasting agencies.
It was agreed at the meeting that increased OPEC+ production will be offset by compensation cuts by members that violated their quotas in May, June and July.
While, countries such as Iraq, Nigeria and Kazakhstan, will have to make extra cuts beyond their already committed cuts in August and September to make up for their excess production.
Russian Energy Minister Alexander Novak, who had tested positive for coronavirus, joined the meeting from home.
“We should endeavour to put this temporary compensation regime behind us, by clearing all the past over-production by end of September,” he said.
Brent crude is trading near a 5-month high above $45 per barrel and has more than doubled since hitting a 21-year low below $16 in April, which was aided by the OPEC+ deal.