Oil headed for a sixth weekly gain after OPEC+ reached a tentative agreement to prolong its record production cuts. Brent crude was back above $40 a barrel, while futures in New York rose 2% on Friday. After almost a week of wrangling, Saudi Arabia and Russia clinched a deal with Iraq over its compliance, paving the way for the agreement’s extension into July instead of tapering them. OPEC will meet at 1 p.m. London time on Saturday, followed by a gathering of the wider group later to sign off on the pact, delegates said.
While oil has recovered rapidly from its plunge below zero in mid-April, the pace of the rebound has slowed in the past couple of weeks. Demand is quickly returning in China, but questions remain for many other nations, especially for consumption of diesel, the biggest-selling oil product globally.
A continuation of crude’s price rally could also encourage more American shale producers to bring wells back and lead to a fraying of the consensus within OPEC+, leaving the alliance with a delicate balancing task.
“OPEC+ will take one month at a time here,” said Bjarne Schieldrop, chief commodities analyst at SEB AB, which “makes sense since demand outlook visibility is so low.”