Opec's in with a chance to retain oil prices at above $41 a barrel. Image Credit: Reuters

Moscow: OPEC and its allies led by Russia meet on Saturday to discuss extending record oil production cuts and to approve a new approach that aims to force laggards such as Iraq and Nigeria to comply better with existing curbs.

The producers - known as OPEC+ - previously agreed to cut supply by 9.7 million barrels per day (bpd) during May and June to prop up prices which collapsed due to the coronavirus crisis. Cuts have been due to taper to 7.7 million bpd from July to December.

Sources said Saudi Arabia and Russia had agreed to extend the deeper cuts until the end of July, but Riyadh was also pushing to extend them until the end of August.

Propping up prices 

Benchmark Brent crude, which slumped below $20 a barrel in April, climbed 2 per cent on Friday to trade at a three-month high of nearly $41. Prices had slipped from recent highs earlier in the week on uncertainty about when OPEC+ would meet.

Saturday's meetings would start with talks between members of the OPEC and followed by a gathering of the OPEC+ group.

Three OPEC sources said an extension to cuts was contingent on high compliance, and countries that produced above quota in May and June must promise to adhere to targets and agree to compensate for any earlier overproduction by cutting more in July, August and September.

Iraq, which had one of the worst compliance rates in May, agreed to the additional pledge, OPEC sources said.

"The Saudis have been pushing Baghdad hard to comply," one OPEC+ source said. "Iraq has agreed to the pledge to improve its full compliance with the cuts."

Baghdad blamed technical reasons and a recent change in its government for weak compliance in May, another OPEC source said.