Oil prices at or below $60 per barrel just won’t cut it when you’re trying to fill the government coffers with cash.
To nudge prices higher, OPEC and a coalition led by Russia, altogether known as OPEC+, have been part of a supply quota system for over a year. But there are problems. Some countries, like Iraq and Nigeria, continue to pump more than their allotment, which annoys the others because it siphons off market share and holds prices down.
The group is meeting again this week to try to hammer out a deal that will last well into 2020.
Russian Energy Minister Alexander Novak said:
“We are still finalising our position. Let’s wait … But I think the meeting, as usual, will be of a constructive nature.”
A source familiar with the Russian thinking told Reuters that Moscow would “most likely” reach consensus with OPEC this week and just needed to iron out a few outstanding issues.
OPEC+ members have been holding back about 1.2 million barrels of oil per day, which is roughly 1.2% of demand.
For its part, Russia is supposed to limit production to 11.18 million barrels per day. But calculations by Reuters show the country pumped 11.244 million barrels per day in November.
Apparently there’s little honor among monopolistic conspirators, but they still press on.
OPEC+ members want to deepen the cuts by about 400,000 bpd to account for the slowing global economy.
Saudi Arabia, OPEC’s biggest producer, is lobbying for extra cuts as higher oil prices would help it balance its budget and support state-owned oil giant Saudi Aramco, which is set to price its initial public offering on Thursday.