A bigger global effort to stabilise oil prices involving all major oil producers including Russia is again on the cards to see that the current crisis does not escalate further putting several oil producers closer to bankruptcies.
Sources said that an emergency meeting of OPEC+ including Russia could be scheduled next month if oil markets weaken further and crude prices crash below $40 a barrel again.
Been at crude extended their gains to trade up 3% on the news, above $43 per barrel.
Reportedly, Saudi Energy Minister Prince Abdulaziz bin Salman spoke of better compliance with oil output cuts by OPEC and its allies as oil markets remained uncertain and the COVID-19 spread continued to dampen any prospect of an economic recovery.
The 22nd Meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC that took place on Thursday via videoconference under the Chairmanship of Prince Abdul Aziz Bin Salman, also reiterated the critical importance of adhering to full conformity (on production cuts) and compensating overproduced volumes as soon as possible.
The JMMC supported, and recommended, to the OPEC and Non-OPEC Ministerial Meeting, the request of several underperforming participating countries
such as Iraq, Nigeria and the United Arab Emirates to extend the compensation period till the end of December 2020 from present September, 2020 after pledging that they will fully compensate for their overproduction by strictly adhering to production cuts over the next three months.
This is vital for the ongoing rebalancing efforts and helping deliver long-term oil market stability.
What this means is that the Covid-19 pandemic has pushed oil producers to extend production cuts beyond September till December to see that suppressed demand did not create a glut situation where oil goes for a free fall again.
The expected OPEC meeting next month could take a call whether OPEC + also need to further extend product cuts beyond 7.7 million barrels per day (bpd), or around 8% of global demand, till December.
Though the OPEC+ has not so far recommended any changes to their current output reduction target of 7.7 million barrels per day (bpd), it could be a possibility if an oil price crash starts again.
OPEC+ has been reducing production since January 2017 to help to support prices and reduce global oil stockpiles. They increased their cuts to a record 9.7 million bpd from May to July after demand plunged due to the coronavirus crisis.
Both Brent and WTI crude are hovering over $41 a barrel but the expectation is that prices may come under pressure again as global economic recovery still looks distant with continuing coronavirus infections. So, extending production cuts and enhancing the levels may be on the agenda again to stabilise the market.