There will be a meeting of OPEC representatives on Saturday 6th June 2020 where it is anticipated they will discuss extending cuts to try to buoy oil prices.
When the Coronavirus arrived oil took a sharp decline and OPEC Menbers had little choice but to curb production in the interests of keeping a semblance of control on prices. They agreed to a cut of 9.7 million barrels daily. Not all the members are adhering to the cuts.
Both Russia and Saudi Arabia are in favour of maintaining a reduction in output to as late as August this year with the hope that it would be enough to see their fortunes turnaround, But whilst the larger producers who may have the ability to cushion the current prices, the smaller producers are not so fortunate. Their economies rely wholly on oil and fluctuations in their only revenue source creates havoc with their internal budgets and their ability to keep their fragile economies going.
Iraq is a guilty member with a poor record of keeping to its targets. A Saudi source has affirmed that Iraq has confirmed their willingness to effect their part to the letter. However Saudi continues to try to push Iraq to keep to its obligations. Iraq has said that they presently don’t have an Oil Minister presently and cited that as one of the reasons compliance has been lacking, as their Finance Minister is presently filling in with a dual role until the new Iraqi Oil Minister is appointed.
The UAE Oil Minister Suhail Al Mazrouei complained bitterly that the large producers are having to keep their end of the bargain with a 100% compliance record whilst the rest are hardly achieving 50%.
Other Countries at odds with compliance like Nigeria stated they were doing everything possible to to adhere to cuts and will continue to do their best, where it was hoped they may reach full compliance by the end of the month. Their compliance level is running at about 52%. Mexico refused to budge by more than 100,000 barrels of reduced production for May and June, and will be at the meeting, It is unlikely they will entertain a quota reduction of 400,000 barrels a day.
Oil prices continue to fluctuate and are well below their average process this time last year.