OPEC+ members extend agreed oil production cut output, Kazakhstan supports agreement
OPEC+ members decided to extend the agreed oil production cut output by 9.7 million barrels per day for another month. This means that nearly 20 oil-producing countries will reduce the production of crude oil until August 1. Energy ministers approved the same figures in April. The largest drop in oil prices caused by the failed negotiations in March, however, hit the global economy.
This time all the traders reaffirmed their commitment to the full implementation of the agreement. Saudi Arabia, the United Arab Emirates and Kuwait have been able to do this.
However, at the meeting it was reported that states such as Iraq, Nigeria, Azerbaijan and Algeria that are not fulfilling obligations can compensate for the backlog in July-September of this year. Algeria fulfilled obligations by only 7 percent.
Mexico unexpectedly withdrew from the agreement, but its obligations will be fulfilled due to an additional reduction in production of the four Arab countries.
Representatives of the cartel noted that the oil market is gradually recovering after the pandemic. Oil prices rose in the last week of May and the first week of June by more than 10 percent only on the expectations of this meeting. The price of Brent crude for the first time in these three months exceeded US$42 per barrel. It is quite possible that the price will stay at this level in the coming weeks. There are also forecasts that oil demand may rise in July.
Kazakh Ministry of Energy reported that Kazakhstan supported the deal. The current agreement had a positive impact on the global oil industry, avoiding even greater workload of oil storage facilities. Further decisions will be made every month, taking into account monitoring the situation on the oil market.