Despite the uncertainty regarding the price of crude oil, OPEC is set to roll over the oil production cuts at least at their current level and could even discuss deepening those cuts.
This is coming on the heel of Nigeria becoming the highest crude oil exporter to Europe in seven months on the North Sea outages.
Outages at North Sea oilfields have helped put competing Nigerian oil on pace to arrive in Europe at the highest levels in seven months in June, according to Refinitiv Eikon data and traders.
Nigeria is set to export about 905,000 barrels per day (bpd) to the continent this month, the most since a roughly five-year high of about 1 million bpd in November.
Thamer Ghadhban, Iraq’s oil minister, said at a conference in London Thursday that OPEC and its non-OPEC allies in the production cut pact were meeting on July 1-2 in Vienna, after postponing their initially scheduled meeting by one week.
The comments for an almost certain OPEC rollover from Iraq—OPEC’s second-biggest producer—echo those of Khalid al-Falih, the energy minister of OPEC’s largest producer and de facto leader, Saudi Arabia, who said earlier this month that the cartel was close to reaching an agreement to extend the production cut deal beyond its current expiry date at the end of June.
“The rollover at least would be at the same level because it has not been very effective, it has been effective to a certain level to minimise the glut in the market, but there are now ideas or calls for agreeing (on) even more,” Reuters quoted Iraq’s oil minister as saying today.
Earlier this month, OPEC sources told Reuters that Algeria had floated the idea of OPEC and its allies deepening the cuts from the current 1.2 million bpd to 1.8 million bpd amid fears of faltering demand due to trade disputes and slowing global economic growth. Yet, Algeria was just floating an idea, not making a proposal, and that idea wasn’t being formally discussed, OPEC delegates told Reuters in early June.
A rollover for OPEC may be “in the bag”, as al-Falih has recently put it, but the big unknown in the larger OPEC+ group is the leader of the non-OPEC producers, Russia, whose Energy Minister Alexander Novak said earlier this week that it’s too early to say if OPEC and its allies would extend their pact to cut oil production, once again leaving the market guessing if Russia is willing to continue cutting its oil production.
Nigerian grades are normally middle-distillate-rich and with Ekofisk having undergone maintenance, Nigeria is meeting European demand for this type of crude, said Ehsan Ul-Haq, lead analyst for oil research and forecasts at Refinitiv.
Supply of the five North Sea crude grades that underpin the dated Brent benchmark is set to fall to around 720,000bpd in June, from 948,000bpd the month before.
The contamination of a pipeline carrying Russian Urals crude in April interrupted flows to central and Eastern Europe for a month and left stocks in need of replenishment.
