OPEC + is on the brink of agreeing to extend the deep production cuts it signed in April after cartel leaders successfully convinced Iraq of the continued need to control production oil, write Javier Blas and Grant Smith of Bloomberg.
There are doubts about the future of the cuts, as earlier reports indicated that Russia may not agree with them. Iraq then emerged as a stumbling block.
Bloomberg reported yesterday that Saudi Arabia and Russia were increasingly fed up with OPEC’s continued non-compliance with number two production quotas.
“Riyadh and Moscow are not joking about implementing some form of compliance improvement mechanism,” Rapidan Energy Group founder Bob McNally told Bloomberg. “Without it, they walk. “
According to the Bloomberg report, Saudi Arabia and Russia lack patience with Iraq and anyone who fails to reach its goals. They insist that laggards not only stick to their quotas, but that they will further decrease in the coming months to make up for their past deficits.
This internal discord in the deal has raised concerns about the future of the deal. If an OPEC member believes he can pump more than his quota, then preventing others from doing the same, the argument goes. And we have seen this before, when Iraq was still below its production targets, which has prompted other OPEC members to express their dissatisfaction with this fact.
But now, according to a delegate who spoke to Bloomberg, this has been resolved now and the OPEC + club will meet on Saturday to formalize that the 9.7 million bpd of production cuts will be extended to the end July, when, according to the Russian Minister of Energy, the oil market could tip over into a shortage of 3 to 5 million b / d.
By Irina Slav for Oilprice.com
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