OPEC and a group of 10 oil-producing nations led by Russia are deepening their crude production cuts, but remain split on whether the curbs should remain in place through the end of the year, officials said Sunday.
Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, met with Russia and a few other countries to review how the 24-nation coalition is complying with a December agreement to withhold 1.2 million barrels a day from global markets.
The broad coalition implemented cuts in February that achieved about 90% of the amount it agreed to, Saudi Energy Minister Khalid al-Falih said at a press conference following the group’s technical meeting. In March the cuts will be “above 100% easily,” he said, meaning the coalition will hold back slightly more than the 1.2 million daily barrels.
The output cuts were meant to shore up oil prices in the midst of a global glut of crude. The effort has led to a more than 25% rise in price of Brent oil, the global benchmark, since the year began.
Iraq, OPEC’s second-largest producer, and Russia, the cartel’s largest external ally, failed to respect their commitments in the first two months of the year. But Russian Energy Minister Alexander Novak said his country is now complying with agreed-upon reductions of 230,000 barrels a day. He said the delays were due to freezing weather conditions.
His Iraqi counterpart, Thamir Ghadhban, said Baghdad was sharply reducing exports. Even so, a divide emerged among the coalition on when the output cuts should end. The current agreement expires in June, and the group disagrees about the impact of U.S. sanctions on OPEC members Venezuela and Iran.
The Trump administration banned Iran’s oil exports beginning in November but granted waivers to a limited number of countries to allow for continued crude purchases. The administration is due to decide on whether to extend the waivers by May. Washington also prohibited the purchase of crude from the Venezuelan regime of Nicolás Maduro in January.
Production levels from Iran and Venezuela “have not declined precipitously—to the point where we see there are still inventory builds,” Saudi Arabia’s Mr. Falih said. “We need to stay the course certainly until June,” he said, adding that the output cuts may have to be pursued until the end of 2019.
Russia’s Mr. Novak said uncertainty over the implementation of U.S. sanctions blurred the group’s planning on future curbs. “We don’t know what will happen in April, so we can’t forecast the second half,” he said.