Updates with further detail on the recommendation
Opec has agreed on a proposal to extend the wider Opec+ group's 9.7mn b/d production cuts by another month, subject to approval by its non-Opec partners.
Opec+ agreed in April to remove 9.7mn b/d of crude from the market in May and June, and then moderate the cut to 7.7mn b/d in the second half of the year, largely from an October 2018 baseline. But the prolonged oil price downturn led to a proposal to extend the deeper cuts into July.
Opec ministers met earlier today via video conference. Discussions focused on non-compliance by some member countries, Iran's oil minister Bijan Namdar Zanganeh said.
Opec members have agreed on a recommendation that "countries who are unable to attain full conformity in May and June 2020 [will] accommodate the pending production adjustment in July, August and September 2020, in addition to their already agreed production adjustment for such months," according to a document seen by Argus.
The Joint Ministerial Monitoring Committee (JMMC) — which tracks the compliance of Opec+ members with their production quotas — will meet every month until the end of the year to track progress on conformity as well as market conditions.
The Joint Technical Committee (JTC) that studies market conditions on behalf of the Opec+ alliance will next adjourn on 17 June, and the next JMMC could assemble on 18 June.
Opec's second-largest producer Iraq, which has struggled with compliance amid severe financial constraints, today reiterated its commitment to the agreement. It reached a "reasonable conformity level" in May given its "economic and financial difficulties and technical complications", Iraqi oil ministry spokesman Assem Jihad said, adding that the "postponement of dialogue" with the Kurdistan Regional Government (KRG) in northern Iraq partly explains its non-compliance.
In April, the KRG agreed to contribute to the cuts. But details are still being finalised as part of ongoing negotiations over outstanding oil and financial issues between Erbil and Baghdad, which are due to conclude in the coming weeks.
Opec's other chronic laggard Nigeria admitted last week that its production exceeded its 1.41mn b/d quota by around 200,000 b/d in May, but said it is currently producing under its quota and that would "translate to full compliance by end of June 2020".
The wider Opec+ group meeting was due to start at 14:00 GMT. Zanganeh said he expects non-Opec members to agree to the extension, although Mexico has previously stated it will not agree to deepen or extend its current production cut.
