DUBAI / MOSCOW / LONDON (Reuters) – OPEC and cartel allies, including Russia, are unlikely to step up oil production cuts this week despite lower commodity prices, and will allow a number of countries such as Iraq and Nigeria to compensate excess production in October and November, sources told Reuters.
OPEC + has been cutting production since May in an attempt to prop up oil prices after a sharp decline in demand due to the coronavirus pandemic.
As part of the current stage of the restrictive deal, OPEC + is cutting production by 7.7 million barrels per day – about 8% of global demand. The group also asked Iraq and several other producers in September to cut production more than the deal stipulates in order to offset overproduction in May-July.
Three sources in OPEC + said the group is likely to extend the overproduction compensation period to October and November to allow Iraq and other countries to move closer to target cuts.
Five sources in OPEC + said that the Joint Ministerial Monitoring Committee (JMMC) following an online meeting on Thursday is unlikely to recommend changing production quotas, despite the recent drop in the price of Brent below $ 40 a barrel.
“I hope this is a short-term phenomenon. The market may have been overreacting in the last few days,” said one OPEC delegate.
De facto OPEC leader Saudi Arabia needs a much higher oil price to balance the budget. The Kingdom has previously indicated that it would like to see prices above $ 45 per barrel.
One source briefed on Saudi Arabia's stance said Riyadh was unlikely to try to raise prices by adding voluntary cuts to its mandatory quota as it did in June.
“They want to protect their market share,” the source said.
Russia had previously hinted that it might want to soften the cuts, but a source familiar with the position of the Russian Federation said that this was not an urgent issue, which could be discussed later.
OPEC on Monday again lowered its forecast for global oil demand in 2020 and now expects it to decline by 9.46 million barrels per day to last year's level to 90.23 million barrels per day.
(Rania El Gamal, Olesya Astakhova, Akhmad Gaddar, Alex Lawler. Translated by Marina Bobrova. Editor Maxim Rodionov)