Agreement On Oil Production

Saudi Arabia, the de facto leader of Opec, and Russia must do a balancing act by driving up oil prices to cover their budgetary needs without pushing them well above $50 a barrel, which would promote a resurgence of rival US shale production. In addition to continuing the current production cuts until July, the agreement also shows that OPEC+ is focusing more on meeting the cuts agreed by member states. The OPEC+ Joint Ministerial Oversight Committee will meet monthly to verify compliance with agreed production quotas. Countries that overproduce their quota in May and June must compensate with corresponding reductions from July to September 2020. Iraqi and Kuwaiti oil producers have also announced discounts to their buyers, although Iraq`s rebate has been lower than Saudi Arabia`s. [67] The UAE also announced an increase in production to 4 million barrels per day, an estimated production capacity of 3.5 million barrels per day. [68] “Each of the 23 countries represented here must be wary of signs of regression from its commitments,” he said at the second meeting. And he warned that production would be closely monitored. While WTI fell on April 20, some Canadian oil fell to 0$US, which halted some production,[51] and Brent oil fell to $18 per person.

[52] “Despite the economic and financial circumstances facing Iraq, the country remains committed to the agreement,” an OPEC press release Assem Jihad, a spokesman for Iraq`s oil ministry, quoted Saturday. Pending the extension, a dispute has erupted among OPEC+ members over compliance with the April agreement, a source of long-standing frustration for many countries. Saudi Arabia and Russia argued that countries that have not fully complied with the April agreement should immediately implement agreed production cuts, with deeper production cuts to compensate for early non-compliance. Mexico said it was not willing to participate in the reductions from July and encouraged members that did not comply to take action. As June 6 approached, market participants eagerly watched whether OPEC+ would remain united, especially in light of the recent détente between Russia and Saudi Arabia. Iraq produced 520,000 bpd above its quota in May, while Nigeria`s overproduction was 120,000 bpd, Angola 130,000 bpd, Kazakhstan 180,000 bpd and Russia 100,000 bpd, according to Opec+ data. The OPEC+ Joint Technical Committee, which oversees oil market conditions, will meet on June 17 to closely monitor market developments. The next scheduled OPEC+ meeting is scheduled for November 30; However, OPEC+ is ready to take decisions sooner if circumstances warrant. Members will review the agreement in December 2021 with a view to a possible extension. The group, known as Opec+, also asked countries like Nigeria and Iraq, which had exceeded production quotas in May and June, to compensate with further cuts between July and September. .

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