Algeria Proposes An Idea Of A Bigger Reduction In Oil Supplies From OPEC And Its Allies

Baghdad, (NINA) - OPEC sources said Algeria has raised the idea of a further reduction in oil supplies from the cartel and its allies in the second half of 2019 as demand falters, although the extension of current production cuts remains the most likely prospect. Oil fell from a peak in 2019 above $ 75 a barrel in April to $ 60 now on fears of weaker demand due to a US-China trade dispute and an economic slowdown, which has alarmed some oil exporters. OPEC members, plus Russia and other producers, an alliance known as OPEC +, have implemented an agreement since Jan. 1 to cut production by 1.2 million bpd. The agreement ends this month, and OPEC and its allies meet in the coming weeks to determine their next step, which sources say includes most likely to extend the current cuts. However, four well-informed sources in OPEC said Algeria had raised the idea of increasing cuts to 1.8 million bpd. Two sources, who are two delegates to the organization, said the idea was not a specific proposal and was not formally discussed. "It's just a matter of thinking loudly about what can be done if trade tensions are exacerbated and could have huge negative effects on the global economy, and then on demand for oil," one source said. The source added "the outcome of a possible summit between the US and Chinese presidents at the upcoming G20 meeting in Japan on June 28 will be vital to determining the fate of the Algerian idea. The meeting between the world's two largest oil consumers would give OPEC an idea of any "softening of tone or escalation of trade tensions," he said. The source said OPEC members were "listening attentively" when asked if the idea of a bigger cut was gathering support. Before the latest price drop, which worsened in late May, Saudi Arabia and Russia two major prospects discussed two proposals to increase in production from 2019, Reuters sources reported last month. But several sources said the most likely prospect now is to maintain the current production cut in the second half of the year. Another source said "The talk now within OPEC is the extension," added "There is no formal proposal, just discussions" of the idea of a bigger reduction. Saudi Energy Minister Khalid al-Faleh said on Friday OPEC was close to agreeing to extend the oil supply reduction agreement beyond June; although more talks with non-OPEC producers were needed because they were also part of the deal. Russia faces pressure from its oil companies, which want to pump more crude. OPEC and its allies have so far not set a date for their next meeting, scheduled for June 25-26, but Russia has proposed postponing it to early July, which Iran and others oppose. OPEC sources said the lack of a resolution was causing headaches for officials at the Vienna-based organization charged with arranging security and other arrangements./ End