OPEC+ to extend record production cuts for another month: Reports

Leading oil-producing nations, hit hard by the coronavirus crisis, have reportedly agreed to extend production cuts for at least another month. The Organisation of Petroleum Exporting Countries (OPEC) and its non-member allies led by Russia will extend the record 9.7 million barrels per day production cut that was set to expire at the end of June, reports says.

The cut will be extended through the end of July, and the group is expected to confirm the agreement at its meeting later on Saturday. The closely watched meeting was initially scheduled for June 9-10, but was pulled forward after OPEC member Iraq agreed to comply with its quota.

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OPEC+ turn off some taps

Saudi Arabia-led OPEC and other oil exporters led by Russia (called as the OPEC+ group) had joined hands to cut crude production in an emergency meeting in April as nationwide lockdowns were announced across the world to contain the spread of COVID-19, crashing oil prices and straining revenues for producers.

As per the April agreement, 9.7 million BPD cut will come into effect from May 1 and will continue for an initial period of two months ending June 30. For the next six months, the total adjustment agreed will be 7.7 million barrel per day output cut which will be followed by a 5.8 million barrel per day production cut for a period of 16 months.

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Oil prices face heat

Oil prices have slumped since the beginning of the year due to the COVID-19 pandemic that has reduced demand as countries around the world have put their populations under lockdown. Compounding the problem, key players Russia and Saudi Arabia had engaged in a price war, ramping up output in a bid to hold on to market share and undercut US shale producers. Globally, more than three lakh people have died from the pandemic and it has infected more than 5.5 million people.

(AP Photo for representation)

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