Yemisi Izuora
The Organization of the Petroleum Exporting Countries, OPEC, and the non-OPEC technical committee has recommended extension of global deal to cut oil supplies for another six months from June.
OPEC, Russia and other producers originally agreed to cut production by 1.8 million barrels per day (b/d) for six months from Jan. 1 to support the market.
Reuters quoted a source familiar with the deal that an extension was recommended by the committee in an effort to clear a glut of crude that has weighed on prices.
Compliance numbers were also reviewed at the meeting in Vienna at the weekend that comprised of officials from countries monitoring adherence to agreed output levels, namely OPEC members Kuwait, Venezuela, Algeria and non-OPEC Russia and Oman.
Nigeria, was exempted from the production cut, but the country’s production had been fluctuating on account of weak infrastructure, investment apathy from unresolved petroleum Bill stalled at the National Assembly, among others.
Overall compliance with pledged cutbacks stood at 98 percent in March, Reuters said quoting an unnamed source, and also said that two other sources disclosed the rate in March represented an increase from February’s level.
Oil prices still declined on Friday, with Brent crude trading below $52 a barrel LCOc1 on concerns that increasing U.S. production and high inventories would thwart the efforts by OPEC and its allies to curb supplies.
The committee’s recommendation that the supply cut deal is extended was not a surprise after oil ministers from top exporter Saudi Arabia and Kuwait gave a clear signal on Thursday that producers planned to prolong the accord.
Russian Energy Minister Alexander Novak said on Friday a decision on extending the pact had not yet been taken but would be discussed with OPEC on May 24. OPEC ministers plus their non-OPEC counterparts are scheduled to meet on May 25.
The meeting also discussed OPEC’s own compliance, which it put at 103 percent, in line with figures published in OPEC’s most recent monthly report.
The panel, which met at OPEC’s Vienna headquarters, is the Joint Technical Committee (JTC) established in January to monitor adherence to supply cuts.
Top OPEC producer Saudi Arabia is also a member of the JTC in its capacity as 2017 OPEC president.