MOSCOW/DUBAI/LONDON, June 6 (Reuters) - OPEC, Russia and
allies were set on Saturday to extend record oil production cuts
through July after crude prices doubled in the past two months
on the back of their efforts to withdraw almost 10% of global
supplies from the market.
According to a draft declaration seen by Reuters as a video
conference opened, the group known as OPEC+ was set to demand
that countries such as Nigeria and Iraq which exceeded quotas in
May and June compensate with extra cuts in July to September.
OPEC+ had initially agreed in April that it would cut supply
by 9.7 million barrels per day (bpd) during May-June to prop up
prices that collapsed due to the coronavirus crisis. Those cuts
were due to taper to 7.7 million bpd from July to December.
Global benchmark Brent crude climbed to a
three-month high on Friday to above $42 a barrel, after diving
below $20 in April. Prices still remain a third lower than at
the end of 2019.
"Despite the progress achieved to date, we cannot afford to
rest on our laurels," Algerian Energy Minister Mohamed Arkab,
the current OPEC president, said as he opened Saturday's talks.
The draft OPEC+ declaration said a joint ministerial
monitoring committee, known as the JMMC, would now meet once a
month until December to review the market situation.
Two OPEC sources said the group had already agreed to a
one-month extension to cuts that have been made by its members.
Ahead of the talks, OPEC sources said Riyadh had been
considering an extension to August or even December.
Saudi Arabia, OPEC's de facto leader, and Russia have to
perform a balancing act of pushing up oil prices to meet their
budget needs while not driving them much above $50 a barrel to
avoid encouraging a resurgence of rival U.S. shale production.
The April deal was agreed under pressure from U.S. President
Donald Trump, who wants to avoid U.S. oil industry bankruptcies.
Trump, who previously threatened to pull U.S. troops out of
Saudi Arabia, spoke to the Russian and Saudi leaders before
Saturday's talks, saying he was happy with the price recovery.
Nigeria's petroleum ministry said Abuja backed the idea of
compensating for its excessive output in May and June.
Iraq, which had one of the worst compliance rates in May,
also agreed to additional cuts, OPEC sources said, although it
was not clear how Baghdad would reach agreement with oil majors
in the country on curbing output.