There have been some rumours circulation since the start of Asia that a weekend meeting could take place between the Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group that is known as OPEC+.
This would be a meeting brought forward that could result in a decision from top crude producers on whether to extend record output cuts.
Saudi Arabia and Russia, two of the world’s biggest oil producers, want to extend cuts of 9.7 million barrels per day (bpd) that major producers agreed to in April.
Market implications
While a suggestion by OPEC president Algeria to meet yesterday was delayed amid talks about poor compliance by some producers, despite that there could be a deal done this weekend, Saudi Arabia, Kuwait and the United Arab Emirates are not planning to extend voluntary additional output cuts of 1.18 million bpd after June, indicating that crude supply could rise next month regardless of any OPEC+ decision.
If there is a decision to forgo any extension of current cuts, the oil price will plummet. However, an agreement to extend cuts beyond next month could still have longer-term bearish implication when considering shale production forecasts.
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