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OPEC, OPEC+ set meetings for June 6 to finalize oil cut extension

June 05/2020

MOSCOW (MRC) -- OPEC and its allies will meet June 6 via webinar to finalize the terms of extending a 9.7 million b/d production cord, indicating a standoff with Iraq over its quota compliance has been resolved, reported S&P Global.

OPEC will meet at 2 pm CET (1200 GMT), and Russia and nine other allies will join the talks at 4 pm (1400 GMT), OPEC announced June 5.

A delegate-level OPEC+ technical committee, co-chaired by Saudi Arabia and Russia, is scheduled to meet June 5 to discuss market conditions and review compliance.

The OPEC+ alliance is expected to extend the cuts through July.

Without an extension, the 9.7 million b/d in cuts - the largest coordinated supply accord in the market's history -- are set to roll back to 7.7 million b/d starting July 1 through the end of 2020. But the uncertainty of the global economy as it takes its first tentative steps towards a recovery from the COVID-19 pandemic has brought members into agreement that continuing the deeper cuts is prudent, sources in the organization told S&P Global Platts.

Saudi Arabia and Russia, the two largest OPEC+ members and its de facto leaders, had been pressuring Iraq and other frequent quota violators, such as Nigeria and Kazakhstan, to improve their performance and also implement extra cuts in the coming weeks to make up for their excess production.

The compliance talks had delayed closing the deal, with a mooted meeting June 4 pushed back, but those issues have now been resolved, said the sources, who asked not to be named because the talks were sensitive.

As MRC informed previously, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim.  At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
Author:Margaret Volkova
Tags:Europe, PP, PE, LLDPE, crude and gaz condensate, PP random copolymer, propylene, LDPE, ethylene, petrochemistry, BASF, Borealis, BP Plc, LyondellBasell, Sabic, Total Petrochemicals, Rossiya, Saudi Arabia, USA.
Category:General News
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