OPEC+ could hold its next meeting this week to decide future of crude production cuts

The next OPEC+ meeting, initially scheduled for June 9-10, could take place earlier than expected according to a Reuters report that cites a letter from the OPEC president of Algeria to the members of the wider producer group.

In the letter, Algeria proposes that the meeting be held this week, on Thursday, so that Saudi Arabia, Kuwait, and Iraq can make their export nominations after the producers’ club decides on the future of production cuts.

Nominations is what Saudi Arabia, Iraq, and Kuwait call their export allocations to long-term clients, which are based on oil demand, Reuters explains, adding they normally take place on the tenth of every month.

A further report citing unnamed sources said Russia did not mind moving the meeting to this week and suggested this might mean Moscow would also agree to extending the current production cuts of 9.7 million bpd beyond the end-June expiry. Of course, nothing is certain and will not be certain until the meeting starts as some Russian oil companies, notably Rosneft, are finding it hard to maintain the current production cuts.

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There is talk, however, that the cuts may be extended by another month or two. An unnamed source told Energy Intelligence that "OPEC-plus could meet on Jun. 4 to decide on a market management policy that might extend the current production cut pact by up to two months."

According to the original agreement reached earlier this year, OPEC+ was to cut 9.7 million bpd in combined production for two months—May and June—and then ease this to 7.7 million bpd, to stay in effect until the end of the year. Then, from January 2021, the production cuts would be further eased to 5.8 million bpd, to remain in effect until end-April 2022.

Meanwhile, however, OPEC is again falling short of its compliance quotas, with compliance rates for May—the first month of cuts—at just 74 percent. The actual cuts in may were only 5.91 million bpd down from April, with Nigeria and Iraq lagging behind others.

By Irina Slav for Oilprice.com