According to a Reuters survey, OPEC failed to fully comply with its share of the cuts in May, and Iraq, as well as another serial laggard in compliance, Nigeria, failed again to deliver the cuts they had promised.
The timing for a meeting between the Organization of Petroleum Exporting Countries and its allies, planned for this week or next, remains unclear as disagreements between members persist.
Oil prices dropped on Thursday, reversing gains in the previous session, on concern over whether major crude producers will be able to agree to extend record output cuts, heightened by worries over a huge build in USA distillate inventories.
Brent crude futures were up 95 cents, or 2.4 per cent, at $40.94 a barrel as of 0920 GMT, after rising over $1 to $41.18.
Saudi Arabia and Russian Federation have agreed to support extending into July the 9.7 million barrels per day in supply cuts which was backed in April by the OPEC+ group. But a suggestion by OPEC president Algeria to meet on Thursday was delayed amid talks about poor compliance by some producers.
Further, Saudi Arabia and other Gulf producers, Kuwait and the United Arab Emirates are not planning to extend voluntary additional output cuts of 1.18 million bpd after June, indicating crude supply could rise next month no matter what OPEC+ decides.
"Any decision to forgo any extension of current cuts would easily unleash a near-term selling spree while an agreement to extend cuts beyond next month would have longer-term bearish implications as upward adjustments to third-quarter shale production forecasts would likely be required". Saudi Arabia and Russian Federation have agreed to extend that deal till July and the grouping is scheduled to meet next week to ensure stricter adherence to cuts by other members and a future course of action. So a rebound in prices due to a gradual easing of Corona curbs around the world and the curtailed output raises the prospect of higher fuel prices in the coming days for consumers in India, which imports over 80% of its oil needs.
"It's not an easy exercise for OPEC to balance the market", said Olivier Jakob, managing director of consultants Petromatrix GmbH.
Striking a bullish note, however, Russia's Energy Minister said the oil market in July could face a shortage of 3 to 5 million bpd, Interfax news agency reported.
Australia heading for 1st recession since 1991
Frydenberg said the Government would provide an update on both the economy and stimulus programs in July this year. It comes even after the government and central bank stepped up measures to support the economy.