Opec moved on Monday to cap Nigerian oil output and called on several members to boost compliance with production cuts to help clear excessive global stocks and support flagging prices.
Khalid al-Falih, the president of the OPEC conference and Saudi Arabia's energy minister, met during the weekend in St. Petersburg with OPEC delegates from Libya and Nigeria, two members states exempt from the agreement so they can steer oil revenue toward national security efforts.
In May, OPEC and some non-OPEC producers, such as Russian Federation, extended an agreement to slash 1.8 million barrels per day in supply until March 2018.
Six OPEC and non-OPEC ministers are due to discuss the market outlook and compliance with output cuts. Implementation of the 2017 budget recently passed by the Senate may be a huge challenge, following the OPEC's decision to cap Nigeria's oil output at 1.8 m barrels per day.
London Brent crude for September delivery rose 24c to $48.30 a barrel by 3.16am GMT on Monday.
Oil slumped into a bear market last month and benchmark Brent crude is trading at about $48/bbl, a gain of less than $2 since the cuts were agreed on past year.
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"The committee may issue a statement on cooperation in production cuts, but output cuts by Libya and Nigeria would be next to impossible considering Libya was just re-emerging from the civil war, for example", said Kaname Gokon, strategist for commodities brokerage Okato Shoji in Japan.
Novak said he would be open to tighter monitoring of output and a possible extension of the cuts beyond their scheduled end in March 2018.
The cap was put in place to drain a glut of oil and support higher oil prices but has largely failed due to a massive increase in output from US suppliers and growth in output from Nigeria and Libya, both of which were exempt from the curbs.
Global inventories are also sky rocketing, even with the continued to cut production that was enforced last January.
Unfortunately for OPEC-who appears to be in a bit of a pickle-while the lower prices may slow the run on U.S. shale, as long as prices stay low, OPEC's many oil-dependent economies will continue to suffer budget holes, and Saudi Arabia probably can not afford an Aramco Valuation with lower oil prices.