The Organization of Petroleum Exporting Countries (OPEC) agreed with its partners outside the bloc to extend the historic production cut by 9.7 million barrels until the end of July, with the aim of ensuring the stability of oil prices, which had deteriorated against the background of the Covid-19 pandemic and restrictions imposed to contain it.
A statement issued by the organization after two negotiating rounds said that “all participating countries… have agreed on the option to extend the first stage of the production amendments applied in May and June of an additional month”.
The UAE Energy Minister Suhail Al Mazroui announced on Twitter that the agreement had been reached.
The organization agreed with its partners on April 12 to cut production by 9.7 million barrels per day from May 1 until the end of June.
The agreement noted that the reduction would be reduced to 7.7 million barrels per day between July and December, to 5.8 million barrels per day between January 2021 and April 2022.
In response to a question by Agence France-Presse, Algerian Energy Minister Mohamed Arqab pointed out 9.6 million barrels, or 100,000 barrels per day less than the number announced in the statement.
The difference could be explained by Mexico’s reservations about reducing production since previous negotiations.
On Friday, Mexican President Andres Manuel Lopez Obrador, in his daily press conference, ruled out any new oil production cuts in Mexico, criticizing countries that had not fulfilled their pledges.
With this agreement, the organization and its partners went beyond the usual conflicts and disputes that centered this week on the failure of a number of countries to implement their pledges.
According to data firm Kepler, the cartel reduced its production by about 8.6 million barrels per day in May, or 11%, less than the planned reduction.
Suspicions of non-compliance are directed, in particular, to Iraq and Nigeria, but the latter opened the door Saturday to compensation for the surplus it had pumped since the beginning of May, during July, August and September.
Earlier on Saturday, Erqab, whose country currently holds the rotating presidency of the organization, said, “We have a very good atmosphere between OPEC and non-member countries.
We are working in full consistency on the main issues”.
However, negotiations are often tense between Russia and Saudi Arabia, which fought a short price war after the failure of previous negotiations in early March.
For his part, Russian Energy Minister Alexander Novak recalled in an introductory speech broadcast on the OPEC website, the importance of fully respecting the reduction quotas.
Despite skepticism, OPEC policy has proven effective since prices in early June rose to about $ 40 a barrel for the West Texas Intermediate (US reference), and also for its European counterpart, Brent North Sea.
Prices had fallen to unprecedented levels around April 20, touching the $ 15 thresholds for Brent and even moved to the negative gauge of West Texas Intermediate.
“Although investors expect this agreement to occur, it will benefit oil prices in the coming months,” said analyst at the Restaad Energy Institute, Bernard Tonjohnen.
The Iranian Oil Ministry, the Organization of Petroleum Exporting Countries (OPEC) agreed to appoint “Amir Hussain Zamani Niya”, Saturday, to represent Iran in the meetings of the organization.
Zamani Niya was appointed as the interim representative of Iran last month, after the death of Hussein Kazem Pour Ardebili, last month, according to Bloomberg News.