* Iraq, Nigeria agree to deeper production cuts
* Oil prices have doubled since diving below $20 in April
* Saudi, Russia keen to avoid new U.S. shale oil spike
* OPEC May Production: https://tmsnrt.rs/2BuY4fi
* OPEC+ Cuts May and June: https://tmsnrt.rs/2SsCSMN
(Adds statements from OPEC, U.S. energy secretary)
By Ahmad Ghaddar, Rania El Gamal and Alex Lawler
MOSCOW/DUBAI/LONDON, June 6 (Reuters) - OPEC, Russia and
allies agreed on Saturday 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 initially agreed in April that it would cut supply
by 9.7 million barrels per day (bpd) during May-June to prop up
prices that collapsed due to the coronavirus crisis. Those cuts
were due to taper to 7.7 million 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," Saudi Energy Minister Prince Abdulaziz
bin Salman told the video conference of OPEC+ ministers.
Benchmark Brent crude LCOc1 climbed to a three-month high
on Friday above $42 a barrel, after diving below $20 in April.
Prices still remain a third lower than at the end of 2019.
"Prices can be expected to be strong from Monday, keeping
their $40 plus levels," said Bjornar Tonhaugen from Rystad
Energy.
Saudi Arabia, OPEC's de facto leader, and Russia have to
perform a balancing act of pushing up oil prices to meet their
budget needs while not driving them much above $50 a barrel to
avoid encouraging a resurgence of rival U.S. shale production.
It was not immediately clear whether Saudi Arabia, the
United Arab Emirates and Kuwait would extend beyond June their
additional, voluntary cuts of 1.18 million bpd, which are not
part of the deal.
BULGING INVENTORIES
The April deal was agreed under pressure from U.S. President
Donald Trump, who wants to avoid U.S. oil industry bankruptcies.
Trump, who previously threatened to pull U.S. troops out of
Saudi Arabia if Riyadh did not act, spoke to the Russian and
Saudi leaders before Saturday's talks, saying he was happy with
the price recovery.
While oil prices have partially recovered, they are still
well below the costs of most U.S. shale producers. Shutdowns,
layoffs and cost cutting continue across the United States.
"I applaud OPEC-plus for reaching an important agreement
today which comes at a pivotal time as oil demand continues to
recover and economies reopen around the world," U.S. Energy
Secretary Dan Brouillette wrote on Twitter after the extension.
As global lockdowns ease, oil demand is expected to exceed
supply sometime in July but OPEC has yet to clear 1 billion
barrels of excess oil inventories accumulated since March.
Rystad's Tonhaugen said Saturday's decisions would help OPEC
reduce inventories at a rate of 3 million to 4 million bpd in
July-August. "The quicker stocks fall, the higher prices will
get," he said.
Nigeria's petroleum ministry said Abuja backed the idea of
compensating for its excessive output in May and June.
Iraq, with one of the worst compliance rates in May, agreed
to extra cuts although it was not clear how Baghdad would reach
agreement with oil majors on curbing Iraqi output. OPEC/O
Iraq produced 520,000 bpd above its quota in May, while
overproduction by Nigeria was 120,000 bpd, Angola's was 130,000
bpd, Kazakhstan's was 180,000 bpd and Russia's was 100,000 bpd,
OPEC+ data showed.
OPEC+'s joint ministerial monitoring committee, known as the
JMMC, will meet monthly until December to review the market,
compliance and recommend levels of cuts. JMMC's next meeting is
scheduled for June 18.
OPEC and OPEC+ will hold their next scheduled meetings on
Nov. 30-Dec. 1.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
OPEC+ Cuts for May and June png https://tmsnrt.rs/2SpTHI8
OPEC May Production https://tmsnrt.rs/2AD7Rj4
Interactive OPEC May Production https://tmsnrt.rs/2BuY4fi
Interactive OPEC+ Cuts May and June https://tmsnrt.rs/2SsCSMN
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>