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OPEC+’s voluntary production cuts that were set to expire at the end of the first quarter could be extended through the end of the year, three OPEC+ sources told Reuters on February 27.
Crude oil prices rose with the news from three anonymous OPEC+ sources who spoke to Reuters, indicating that OPEC+ was considering an extension of its voluntary production cuts into the second quarter to lend further support to the market. What’s more, the sources suggested that the group could keep the voluntary cuts in place through the end of this year.
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In fact, one of the OPEC+ sources said that the cut extension into the second quarter was “likely”.
Neither OPEC nor Saudi Arabia’s Energy Ministry responded to Reuters’ request for comments.
Oil prices were trading up more than 1% on the news in afternoon trading. But the oil industry was largely already betting on OPEC+ extending its oil production cuts beyond the first quarter and into the next, a Bloomberg survey showed last Friday. The anonymous survey predicted. According to industry watchers, OPEC+ would be forced to keep the oil off the market, with supply continuing to exceed demand. “OPEC+ have no choice but to extend the current cuts in order to avoid a meltdown,” Tamas Varga, analyst at PVM Oil Associates Ltd, said last week.
OPEC+ members collectively decided to voluntarily cut 2.2 million bpd from the group’s production this quarter, although much of that was production cuts that were already in effect, including Saudi Arabia’s 1 million bpd voluntary cut. Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, has always left the door open to extending the cuts, saying as far back as December that the production cuts could extend beyond March should the market require it.
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