The Organisation of Petroleum Exporting Countries (OPEC), Russia and allies have agreed to extend oil production cuts until the end of July, 2020.
The agreement which was made during the 11th OPEC & non-OPEC Ministerial Meeting under the chairmanship of Prince Abdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy was held via video conference to assess developments in the global oil market.
“Demand is returning as big oil-consuming economies emerge from pandemic lockdown. But we are not out of the woods yet and challenges ahead remain,” Saudi Energy Minister told the video conference of OPEC+ ministers.
Bjornar Tonhaugen from Rystad Energy. said Saturday’s decisions would help OPEC reduce inventories at a rate of 3 million to 4 million barrels per day (bpd) over July-August.
“The quicker stocks fall, the higher prices will get. And that is crucial for many OPEC+ economies, whose fiscal budgets count on oil sales. Prices can be expected to be strong from Monday, keeping their $40 plus levels,” he added.
OPEC+’s joint ministerial monitoring committee, known as the JMMC, would now meet every month until December to review the market, compliance and recommend levels of cuts.
The next JMMC meeting is scheduled for June 18, while the next full OPEC and OPEC+ meeting will take place on November 30-December 1, 2020
It would be recalled that OPEC+ had initially agreed in April that it would cut supply by 9.7 million barrels per day during May-June to prop up prices that collapsed due to the coronavirus crisis.