MOSCOW (MRC) -- OPEC and its allies are unlikely to deepen supply cuts at their ministerial meeting on Sunday despite a fall in oil prices toward $70 per barrel, four sources from the alliance told Reuters.
OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40% of the world's crude and supplies around 60% of the oil export market, meaning its policy decisions can have a major price impact.
As the economic outlook worsened, several members of OPEC+ in April pledged voluntary cuts starting from May and to continue to the end of the year. This was in addition to a 2 million barrels per day (bpd) cut agreed in early October to output targets versus an August 2022 production baseline. It brought total output cuts to 3.66 million bpd, or about 4% of global consumption.
The group of late has cut by more than its targets mainly because of capacity limitations in West African producers Nigeria and Angola. A Reuters survey found the two countries missed their output targets by a combined 600,000 bpd in May, while outages in the Kurdistan Region of northern Iraq meant the country produced 220,000 bpd below its target last month.
The surprise announcement in April helped to drive benchmark Brent crude prices about USD9 per barrel higher to above USD87 over the days followed, but Brent has since lost those gains to trade below USD73, under pressure from concerns about global economic growth and its impact on fuel demand.
Last week, Saudi Energy Minister Prince Abdulaziz bin Salman told investors he said were shorting the oil price to "watch out," which many market watchers interpreted as a warning of additional supply cuts.
Russian Deputy Prime Minister Alexander Novak subsequently said he did not expect any new steps from OPEC+ in Vienna, Russian media reported. The Kremlin on Thursday did not comment on the meeting's outcome, but Kremlin spokesman Dmitry Peskov said relations with Saudi Arabia were "constructive, based on mutual understanding, mutual respect, mutual trust".
We remind, Russia is leaning towards leaving oil production volumes unchanged ahead of an OPEC+ policy meeting on June 4 because Moscow is content with current prices and output. OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, surprised the market on April 2 with further output cuts that pushed up the price of oil.