OPEC+ to extend production cuts

Photo: Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images
Photo: Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images

OPEC and its allies agreed on a one-month extension of record oil production cuts as they look to stabilise the oil market.

The group will maintain its cut of 9.7 million barrels a day to the end of July, instead of easing it to 7.7 million after June as previously planned, Bloomberg reported.

Scroll to continue with content
Ad

Countries including Iraq, which had one of the worst compliance rates in May, and Nigeria, have promised to implement their cuts by making extra reductions from July to September to make up for failing to hit their targets in May and June, the report said.

The OPEC+ Joint Ministerial Monitoring Committee is set to meet on 18 June, and could recommend a further extension if deemed necessary, pushing the deep production cuts into August, Bloomberg cited a delegate as saying.

READ MORE: Coronavirus: Renter eviction ban extended

OPEC slashed supply in May and June to try and support prices, which were in free-fall due to collapsing demand caused by the coronavirus pandemic.

The cuts have doubled oil prices since April. Analysts said the organisation is also looking to prevent a recovery of the ailing US shale oil market.

In a statement, OPEC reiterated the deal with Iraq in particular, stating the country “has renewed its full commitment to the oil production adjustments decisions reached in April 2020 by OPEC members countries and non-OPEC oil producing countries participating in the Declaration of Cooperation, noting the importance of team spirit and joint efforts to achieve stability and balance in the global oil market.”

Brent futures (BZ=F) were trading 5% higher at $42 a barrel at Friday’s close, while crude futures (CL=F) were up 1.56% to $38.97 per barrel.

READ MORE: Coronavirus: How Brits have saved hundreds of pounds in lockdown

What to read next