Just as the Saudis and Russia are said to be considering bringing back some production to address supply concerns, the energy ministers of Saudi Arabia, Kuwait, and the United Arab Emirates (UAE) will meet on Saturday in Kuwait City to discuss OPEC-related matters, Bloomberg reported on Tuesday, citing people with direct knowledge of the plans.
Saudi Energy Minister Khalid al-Falih, Kuwait's Bakheet Al-Rashidi, and the UAE's Suhail Al Mazrouei who holds the OPEC presidency this year, will be talking about OPEC policies and could be joined by Mohammed Al Rumhi, the oil minister of non-OPEC Oman, which is part of the OPEC/non-OPEC production cut deal.
The meeting of the three ministers of ally OPEC Gulf countries will be held "likely to ensure that these countries are on the same page ahead of the OPEC meeting next month," Ole Hansen, head of commodities research at Saxo Bank, told Bloomberg.
Although Saudi Arabia and Russia may have held initial discussions about raising production, many other OPEC and non-OPEC members have not been consulted about this potential shift in production strategy. Some officials from both the OPEC and non-OPEC lineup of the deal have said they didn't approve of raising production, according to Bloomberg.
"Potential dissent will very much depend on the price behavior between now and June 22. Having seen a five dollar drop in a few days is obviously upsetting to those who were not privy to last week's announcement," Saxo Bank's Hansen told Bloomberg.
Saudi Arabia and Russia, as well as the UAE and Kuwait, could be the biggest winners from a possible easing of the cuts, because those countries have the spare capacity to ramp up production, according to Hansen.
Commenting on the potential increase in production, Helima Croft, RBC Capital Markets Managing Director and Global Head of Commodity Strategy, told CNBC on Tuesday that she expected OPEC and allies to bring back barrels in the lower end of the 200,000 bpd-1 million bpd range that has been circulating in media reports.
"I can't see them putting a million barrels on the market," Croft said, adding that the Saudis have their own revenue needs and there are a lot of OPEC countries who like the agreement, so there would be some negotiation involved.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More