- OPEC+ countries will meet this weekend to finalize extending production cuts until July at least, OPEC delegates said.
- Oil spiked on the news, with Brent crude, the international benchmark, up more than 4% in morning US trade.
- The meeting which was due to take place on Thursday was cancelled due to a compliance dispute.
- OPEC+ had agreed to cut 9.7 million barrels of oil per day in May and June.
- A Reuters Survey showed that Iraq only met 38% of its compliance requirements in July, and Nigeria met only 19% of its production cut.
- Delegates told the Wall Street Journal that the new deal follows a commitment from Iraq to improve its compliance.
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Oil prices jumped on Friday as OPEC+ countries reportedly agreed to a production cut extension of at least a month and set a meeting for June 6, ending days of a compliance dispute.
The Wall Street Journal reported on Friday that OPEC and its allies are set to meet Saturday to finalize a deal on production cuts until July.
This paves the way for laggard countries like Iraq and Nigeria to comply with existing production cuts.
OPEC+ was due to meet on Thursday but lack of compliance with cuts by countries including Iraq and Nigeria prompted the meeting to be postponed.
Brent, the global benchmark rose 4.1% to $41.54 a barrel and West Texas Intermediate is up 3.4% to $38.58 a barrel as of 8:15 a.m. ET.
Brent breached $40 for the first time in 3 months earlier this week.
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A survey published by Reuters last week showed that the 13-member OPEC bloc pumped 24.77 million barrels per day in May, down 5.91 million barrels from April.
But the global oil coalition decided on April 12 to slash production by a record 9.7 million barrels per day in May and June, meaning that countries in May only delivered 4.48 milion barrels per day of the pledged cuts, amounting to 74% compliance.
The Journal said, citing OPEC delegates, that the new deal follows a commitment from Iraq that it will comply with the curbs.
Reuters’ survey showed Nigeria made only 19% of the promised reduction, while Iraq met 38% of its compliance obligations, significantly lower than its Gulf peers.
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Russian news agency RIA reported on Friday that Russian state producer Lukoil’s vice president, Leonid Fedun said “it would be absolutely right” to extend production cuts by two months.
Previously Russia was said to favour ending production cuts in June, while Saudi Arabia wanted curbs in place for at least another 3 months.
Crude prices remain well below the levels they saw before Saudi Arabia and Russia kicked off a price war on March 6.
While both benchmarks have more losses to recover before experiencing a full rebound, both rallied in May.
This followed negative US oil prices in April which had also fed into Brent prices.