Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to extend the cut in crude oil production until the end of July, said the organization on June 6 - Photo by Secretariat of OPEC

JAKARTA (TheInsiderStories) – Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to extend the cut in crude oil output until the end of July, said the organization on June 6 after meeting through virtual conference. The group also demanded Nigeria, Iraq, and other countries that produce oil exceed their quota to be able to offset additional cuts starting July to September.

“The Meeting reaffirmed the commitment of the participating producing countries in the ‘Declaration of Cooperation’ (DoC) to a stable market, the mutual interest of producing nations, the efficient, economic and secure supply to consumers, and a fair return on invested capital,” said the chairman Prince Abdul Aziz Bin Salman, Saudi Arabia’ minister of energy, and co-chair Alexander Novak, minister of energy of the Russia in an official statement.

In April, the oil cartel agreed to cut oil production by 9.7 million barrels per day (mb/d) during May-June to hoist oil prices that had fallen dramatically as a result of the COVID-19 pandemic. The cut will continue to 7.7 million barrels per day from July to December.

The group also welcomed Ecuador, Indonesia, Trinidad & Tobago as observers. OPEC noted additional adjustments from Saudi Arabia 1 mb/d, the United Arab Emirates 100,000 bpd, Kuwait 80,000 bpd, and Oman 10,000 – 15, 000 bpd in June. Then, a voluntary adjustments from several countries, such as Norway and Canada as well as various oil company statements revising downward production plans and shutting in supply.

They said, OPEC+ underscored how the production adjustments in May, alongside the emergence of many economies from the lockdowns due to the COVID-19 pandemic, have helped garner tentative signs of a recovery in the global economy and oil market.

However, the Meeting emphasized that it was vital that DoC Participants, and all major producers, remain fully committed to efforts aimed at balancing and stabilizing the market. In this regard, it was noted that global oil demand was still expected to contract by around 9 mb/d for the whole of 2020.

In the meeting, the producers reconfirmed the existing arrangements under the April agreement. Subscribed to the concept of compensation by those countries who were unable to reach full conformity (100 percent) in May and June, with a willingness to accommodate it in July, August and September, in addition to their already agreed production adjustment for such months.

In addition, agreed the option of extending the first phase of the production adjustments pertaining in May and June by one further month. They also called upon all major oil producers to proportionally contribute to the stabilization of the oil market, taking into consideration the substantial effort made by the OPEC+ of the DoC.

In order to observe the fair, timely and equitable implementation of the above, the Joint Ministerial Monitoring Committee (JMMC) was requested to closely review the general energy market conditions and related factors, oil production levels, and conformity levels with the DoC. The committee is to meet monthly until December 2020 for this purpose, with the next meeting set for June 18.

The members decided that an OPEC and non-OPEC Ministerial Meeting also will convene in Vienna, Austria, on Dec. 1, 2020.

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