Opec, Russia and allies have agreed to extend record oil production cuts until the end of July, prolonging a deal that has helped crude prices double in the past two months by withdrawing almost 10% of global supplies from the market.
The group, known as Opec+, also demanded countries such as Nigeria and Iraq, which exceeded production quotas in May and June, compensate with extra cuts in July to September.
Opec+ had agreed in April that it would cut supply by 9.7m barrels per day (bpd) during May-June to prop up prices that had collapsed due to the coronavirus crisis. Those cuts were due to taper to 7.7m bpd from July to December.
“Demand is returning as big oil-consuming economies emerge from pandemic lockdown. But we are not out of the woods yet and challenges ahead remain,” the Saudi energy minister, Prince Abdulaziz bin Salman, told the video conference of Opec+ ministers on Saturday.
Benchmark Brent crude climbed to a three-month high of above $42 a barrel on Friday, after diving below $20 in April. Prices remained a third lower than at the end of 2019.
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