Saudi and Russia call for compliance as OPEC+ extends production cuts
Oil fell more than 3% on June 8 after OPEC+ agreed over the weekend to extend output cuts of 9.7 million barrels per day (bpd) through July as coronavirus continues to weigh on demand.
Brent crude fell, breaking a seven-day streak of gains, Reuters reported. Brent futures fell $1.50, or 3.6%, to settle at $40.80 a barrel. US West Texas Intermediate crude (WTI) fell $1.36, or 3.4%, to $38.19.
Saudi Arabia and Russia said June 8 that the success of the production cuts by OPEC and non-OPEC allies, known as OPEC+, relies on compliance. “We have no room whatsoever for lack of conformity,” Saudi Energy Minister Prince Abdulaziz bin Salman said during a virtual press conference on June 8, adding that those that failed to conform to the OPEC+ deal in May and June should compensate with extra cuts from July through to September, CNBC reported. He earlier reiterated Riyadh’s commitment to stabilise the oil market.
Russian Energy Minister Alexander Novak said that overall conformity levels are extremely high, considering the magnitude of the cuts and how bad the situation is. “We have spent a lot of time discussing full conformity and how this will be compensated because the success of the deal and the success of our efforts rests on all countries doing their part,” Novak was quoted as saying. Novak said earlier that there will be an oil supply deficit in a few months.
Meanwhile, US shale producers have reportedly started to reopen closed wells as prices have rebounded. And China saw a big rebound in crude imports in May with a record 11.3 million barrels per day, an increase of 13% from April.