Oil prices rose on Friday to their highest level in three months, above $ 41 a barrel, at a time when OPEC Plus countries, led by Saudi Arabia and Russia, are heading towards an agreement to extend production cuts during a meeting to be held tomorrow afternoon instead of a week.
Brent crude futures for August delivery jumped 3% to $ 41.20 a barrel in Friday's trading, and West Texas Intermediate crude for July delivery rose 2.30% to $ 38.27.
Brent fell below twenty dollars a barrel last April. Prices have fallen from recent highs this week due to the uncertainty surrounding the date of the OPEC Plus meeting.
According to two sources in OPEC Plus, Saudi Arabia and Russia agreed to extend the largest cuts until the end of next July, but they said that Riyadh is also paying to extend it until the end of August.
Saudi Energy Minister Prince Abdulaziz bin Salman said today that OPEC and its allies are in the process of holding a meeting on oil production policy on Saturday, and told Reuters that the conditions now guarantee the expected success of the meetings and that coordination is underway to hold meetings of OPEC and OPEC Plus tomorrow afternoon.
Meanwhile, the Russian news agency quoted Leonid Fedon, vice president of the oil company Lukoil as saying today, "It is quite right" to extend the existing large reductions of oil production agreed by OPEC and non-OPEC producers for two months.
Tomorrow's meeting will discuss extending cuts of 9.7 million barrels per day, which were originally scheduled to continue in May and June only.
Last April, OPEC Plus countries agreed to cut production by about ten million barrels per day from May 1 to the end of June.
This agreement provides for a gradual reduction in the historical production cut from July, with a reduction in supply in the market by 7.7 million barrels per day from July to December next.
An OPEC Plus source said that the videoconferences held on Saturday will start with talks between members of the Organization of Petroleum Exporting Countries (OPEC) at 12 UTC, followed by a meeting of the OPEC Plus group at 2:00.
Three OPEC sources said that the extension of the cuts is subject to a higher level of compliance, adding that countries that have produced more than their share last May and June should pledge to commit to the goals, and agree to compensate for any production surplus that occurred earlier by reducing further From July, August and September.
Iraq has one of the worst compliance rates last May, according to a Reuters survey of OPEC production. Sources in the organization said that Baghdad agreed to the additional pledge.
An OPEC Plus source said that the Saudis "are putting severe pressure on Baghdad to comply ... Iraq has agreed to pledge to improve its full compliance with the cuts."