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OPEC+ oil tensions ease after Saudis speak to Iraq, Nigeria

Saudi Arabia commended Iraq for implementing almost all its pledged oil-production cuts and Nigeria told the kingdom it was committed to hitting its target, in further signs that disputes among OPEC+ members over cheating of quotas are being resolved.

Saudi Energy Minister Prince Abdulaziz Bin Salman spoke to his Iraqi counterpart Ihsan Abdul Jabbar, according to a joint statement from their offices on Monday. The prince said he was satisfied with Baghdad’s improved compliance in June.

Prince Abdulaziz also had a call with Nigeria’s de facto oil minister, Timipre Sylva. The Saudi minister stressed the importance of all countries adhering to their commitments to cut oil output, while Sylva said Nigeria would compensate until September for producing more than its quota allowed in May and June, according to a separate statement.

Iraq, Nigeria and other nations such as Angola have came under fire from Saudi Arabia and Russia — the effective leaders of the OPEC+ alliance — for over-production. The Organization of Petroleum Exporting Countries and its allies agreed in April to cut supply by almost 10 million barrels a day to prop up prices in the face of the coronavirus pandemic.

Last month, OPEC produced 22.7 million barrels a day, the lowest amount in almost three decades.

Brent crude has more than doubled since April to $42.28 a barrel thanks to the cuts and an easing of virus lockdowns in many countries. But it’s still down 36% this year, putting huge strain on the finances of oil producers.

Iraq, OPEC’s biggest producer after Saudi Arabia, implemented almost 90% of its pledged supply curbs in June and will reach full compliance at the beginning of August, it said in the statement.

OPEC+ will hold a video conference on Wednesday to review the deal. Delegates have suggested they will stick with a plan to begin tapering their historic output reductions in August.

Iraq and Nigeria are among members that have promised additional production curbs from July to September to make up for failing to hit their targets earlier.