Writer Nick Cunningham said in an article published by the American "Oil Price", that the OPEC Plus meeting was expected to be organized on the ninth of June, but it is expected to be submitted to the fourth of this month.
The latest reports indicate that the idea for the next meeting is to extend the existing production restrictions for a period of one to three months. Without the extension of the exceptional cuts agreed upon last April - which includes reducing production by 9.7 million barrels per day - these cuts will be voided by the end of this June.
Under the original OPEC Plus plan, the cuts are set to continue in May and June and shrink to 7.7 million bpd.
From July to December.
According to some reports, Saudi Arabia wants to extend the agreement to reduce production until the end of the year, while Russia has expressed its refusal to do so, after a Russian source in the field of oil pointed out that production can be reduced for a month or two, not half a year.
The historical cuts succeeded in getting the oil market out of complete chaos, and oil prices rose from the negative region during the month of April last to exceed $ 30.
And yesterday, Brent crude contracts, the world benchmark, ended the trading session 3.3% higher, to settle at the settlement of $ 39.57 a barrel, while the US benchmark WTI contracts jumped $ 1.37 to 4% to reach the settlement of $ 36.81 a barrel, according to Reuters data.
The rapid closure of the oil shale industry in the United States also contributed to some balance in the market, as this shutdown led to American production dropping by at least 1.6 million barrels per day, a decrease of more than 12% in just two months.
Extending the agreement to reduce production
according to the author will extend the agreement to reduce production to prevent a sharp collapse in this vital sector, although it is not clear that this decision will contribute to raising oil prices above their current levels.
According to analysts of the GBC Energy Research Institute, the fact that crude oil prices did not react much to the news of a possible production cut extension could be seen as a sign that the market has priced oil with much optimism.
Russia may not want to extend more than a month or two, which raises questions about what will happen later this year.
At some point, there will be pressure to start abolishing production cuts. Some analysts have indicated that an increase in oil prices to $ 40 a barrel will cause a new price war, according to the author.
Iraq and Nigeria's late compliance with the agreement raises the possibility of non-compliance of the positions of OPEC Plus members. Iraq achieved a compliance rate of only 42% of the agreed cuts for last May, while Nigeria registered a compliance rate of only 34%.
While many oil producing countries suffer from declining oil revenues due to the collapse in prices, Iraq and Nigeria are under special pressure, compared to other rich Gulf countries.
Finance Minister Ali Abdul Amir Alawi and Acting Iraqi Oil Minister wrote on Twitter that Iraq would further reduce oil production, and remains committed to the OPEC Plus agreement in this regard.
The writer added that the urgent necessity to prevent a sharp drop in oil prices constitutes a strong catalyst towards formulating an agreement stipulating the extension of the cuts again, indicating that oil demand rose from its lowest levels during the month of April last, but it is 100% away from the rebound.
Crude oil stocks have already increased last week, while demand for US gasoline has remained at around two million barrels per day and below pre-pandemic levels.
Tension between America and China
The writer says that the tension between the United States and China is another threat to extend production cuts, as US President Donald Trump said last Friday that the United States would end its special relationship with Hong Kong, in response to Beijing's decision to impose a new type of power on Hong Kong.
On the other hand, China on Monday ordered state-run companies to cut purchases of US agricultural commodities, and accordingly the deteriorating trade ties are another worrying point for the global economy.
Faced with this headwind and a lot of uncertainty, he adds, the risk of canceling the oil production cut deal remains greater than agreeing to extend it again.