OPEC leader Saudi Arabia and non-OPEC Russia have agreed on a preliminary deal to extend existing record oil production cuts by one month while raising pressure on countries with poor compliance to deepen their output cuts, OPEC+ sources told Reuters.
“Any agreement on extending the cuts is conditional on countries who have not fully complied in May deepening their cuts in upcoming months to offset their overproduction,” one OPEC source said.
OPEC+ agreed last month to cut output by a record 9.7 million barrels per day, or about 10% of global output, in May and June to lift prices battered by plunging demand linked to lockdown measures aimed at stopping the spread of the coronavirus.
Rather than easing output cuts in July, OPEC and its allies, a group known as OPEC+, were discussing keeping those cuts beyond June.
The group also considered holding an online meeting on June 4 to discuss output policy, after Algeria, which holds the presidency of the Organization of the Petroleum Exporting Countries, proposed bringing forward a meeting planned for June 9-10.
The OPEC source said that an earlier meeting on June 4 is also conditional on compliance and that the discussions now are about implementing criteria for those countries who have not fully complied with the oil cuts and how they can compensate for overproducing in the coming months.