Countries belonging to the OPEC+ group are discussing the idea to implement oil production cuts for at least three months from May to July, Russian news agency TASS reported on Tuesday, citing two sources at OPEC.
“Three months. I believe the deal can be made from May because April deliveries have already been scheduled,” a high-ranking source in OPEC told TASS, while another source noted that a potential production cut would be “definitely longer than until June.”
Brent Crude dropped to $33.06 while Nigeria’s Bonny Light was down by 1.50% to $26.29 as at 4:10 pm WAT.
Since April 1, OPEC members have been able to adopt a pump-at-will strategy in the wake of a 70% fall in oil prices.
OPEC and its allies are in the midst of coordinating new output cuts with the help of other oil producers such as the US, Canada and the US. A webinar meeting is scheduled for Thursday.
Nigeria’s petroleum ministry said it “is prepared to join the rest of the world in making the necessary sacrifices needed to stabilize the crude oil market; and to prevent what is likely to be a major global economic meltdown.”
Nigeria, Africa’s top oil producer, was not totally compliant with its quotas in the recent OPEC/non-OPEC agreements, according to data from the Platts OPEC Survey.
The country has found it hard to curtail its output under the OPEC quotas due to the 205,000 b/d Egina field, which started up in December 2018.
NNPC GMD, Mele Kyari said all Nigeria’s export terminals were still operating despite COVID-19.
Russia’s energy ministry has received an invitation from OPEC to take part in Thursday’s video conference, and Russia confirms it will take part in that meeting, an official at the energy ministry told TASS on Tuesday.
The leaders of the OPEC+ group, Saudi Arabia for OPEC and Russia for non-OPEC, are reportedly ready to negotiate a massive global production cut amid sinking demand, despite a bitter weekend spat between the former allies about who ditched whom in the OPEC+ talks.
A video meeting between Saudi Arabia, Russia, and other major oil producers, including representatives from the U.S., was slated to be held on Monday. However, the meeting was postponed for Thursday after the Saudis and the Russians accused each other of dumping the other in the OPEC+ alliance that had tried to manage oil supply and oil prices for the past three years.
Both producers are now signaling that they are ready to talk but are pointing out that any massive cut, 10 million bpd-15 million bpd, as touted by U.S. President Donald Trump, should involve the United States, too.
OPEC hasn’t asked President Trump to find a way to ask U.S. oil companies to collectively cut production, the President said on Monday.
“I think it’s happening automatically but nobody’s asked me that question yet so we’ll see what happens,” President Trump said at a press briefing, referring to U.S. oil production.
Analysts say that even if a larger so-called OPEC++ group – involving OPEC+ plus the U.S., Canada, Brazil, Norway, and other producers not part of OPEC+, were to agree to a huge cut of 10 million bpd, this will still be much lower than the demand loss expected in Q2 and will not go far to prevent global storage filling to the brim by mid-May.