Oil markets may get a lift when they open tomorrow as some of the world’s biggest oil producers, including Opec members, plan to meet in Abu Dhabi next week to see how they can enforce compliance of oil production cuts.
Russia, which is not an Opec member, and Kuwait, which is, are reported to be chairing the meeting – a date for which has yet to be decided but which is likely to happen next week or soon after.
“I think it will be modestly positive but I don’t think we should expect a big response because the market heard a lot out of Opec for the last couple of months leading to the meeting in St Petersburg,” said Robin Mills, chief executive of Qamar Energy, a Dubai-based energy consultancy. “The market will want to see some action in terms of stronger compliance.”
“Overall, compliance has been good until very recently. It’s been slipping recently and so I think this meeting is an attempt to try and reinforce the compliance and try and bring some of the countries that are not complying into line.”
Mr Mills noted, however, that compliance was not the biggest issue facing the oil market but that an increase in production from Libya, Nigeria and the US, all of whom are not in the deal, is keeping prices from rising.
Suhail Al Mazrouei, the UAE energy minister, is optimistic that oil producers would comply with a supply cut deal and that he expected improvements towards market balance.
The Opec and allied non-Opec producers agreed on May 25 to extend an existing supply curb into 2018.
“We are optimistic about ... compliance from Opec and non-Opec countries and we look forward to ... gradual improvements toward market balance,” Mr Al Mazrouei wrote on Twitter.
"Saudi Arabia and Gulf states [have] an excellent track record of compliance to Opec decisions and together with Iraq carry most of the cut," he wrote.
The agreement, which came into effect at the start of the year, brings together Opec and non-Opec nations in an effort to take as much as 1.8 million barrels of oil per day off the market.
While compliance was high in the first months of the pact, it began to slide as the expected crude price recovery failed to materialise.
Some non-Opec nations have been invited to the Abu Dhabi meeting but have yet to confirm their presence.