The Organization of Petroleum Exporting Countries and its allies (OPEC+) will meet today, Thursday, to discuss oil production cuts.
OPEC+ is going through a sensitive period in light of the organization’s struggle to keep prices balanced and not reach the low levels of last year.
The pandemic has affected oil prices, due to the suspension of economic sectors and the supply increase with a sharp decrease in demand.
Oil production cuts
While expectations were increasing that 1.5 million barrels would be allowed to return to the market during this meeting, sources said yesterday production cuts night be extended.
Yesterday, the Joint Ministerial Monitoring Committee (JMMC) meeting ended without a recommendation regarding production policy.
Sources told Reuters had said the group is considering extending oil production cuts from this March to next April. This is due to crude markets fragility.
The sources added that OPEC+ puts an extension of the oil production cut among other options at today’s meeting.
While the situation in the United States was reassuring that the oil market situation allows for the return of production, data appeared the day before yesterday, Tuesday, indicating that crude oil inventories in the United States recorded an unexpected sharp increase last week.
Crude stocks rose by 7.4 million barrels in the week ending February 26, while analysts polled by Reuters had expected a drop of 928,000 barrels.
Prevailing expectations at the beginning of this week indicated that OPEC+ would move to light restrictions on supplies and produce more oil the next month since economies are recovering from the Coronavirus.
It also showed that up to one and a half million barrels per day of oil might be allowed to return to the market through stopping the voluntary reduction, which was introduced by Saudi Arabia in February and March, and increasing production by five hundred thousand barrels per day.
Russian Deputy Prime Minister Alexander Novak said on Wednesday that he shared concerns about risks and uncertainties on the global oil markets, but added that the situation has improved, RIA news agency reported.
“I undoubtedly share the concerns which we have heard today… over lots of uncertainties and risks, the lockdowns,” he was quoted as saying to a state-run TV station.
“However, if (we) look at the situation, it is much better than a year ago, than it was in autumn,” he said.