in

Saudis and Russians reach deal on oil production cut, but it's less than drop in demand – CNN, CNN

Saudis and Russians reach deal on oil production cut, but it's less than drop in demand – CNN, CNN

Abu Dabi (CNN Business) OPEC and Russia reached a tentative agreement Thursday evening for a global cut in oil production by 12 million barrels a day for May and June, the deepest cut ever agreed to by the world’s oil producers, a senior OPEC source told CNN.

The decline in production amounts to only about 12% of the world’s normal supply of oil, far below the estimates for how much demand for oil has collapsed in the wake of the coronavirus crisis. And it is unlikely to stem the massive plunge in oil prices in recent months.

The deal was reached as oil ministers from OPEC and a number of non-OPEC oil producers held a video meeting on Thursday. It began with OPEC Secretary General Mohammad Sanusi Barkindo sounding the alarm about both oil prices and demand.

“For the oil market, [the coronavirus] has completely up-ended market supply and demand fundamentals since we last met on March 6,” he said. “Our industry is hemorrhaging; no one has been able to stem the bleeding.”

Barkindo said that projections call for demand of nearly million millioner barrels per day in the current quarter. “These are staggering numbers! Unprecedented in modern times,” he said.

At that rate, “Given the current unprecedented supply and demand imbalance there could be a colossal excess volume of . 7 million barrels a day in the the second quarter of , “he said.

Even those dire forecasts may be too optimistic, as they could be underestimating how much demand has fallen as people are ordered to stay inside and with all but essential businesses shuttered in much of the world.

Tom Kloza, the chief oil analyst for the Oil Price Information Service, said he believes demand is down as much as million to million barrels a day. “This cut is woefully inadequate to stabilize prices into at least the summer,” he said Thursday evening.

The deal would see the output reduced to 8 million barrels a day from July to December followed by a 6 million barrels a day reduction from January 2021 to April 200331120011

Non-OPEC member Mexico, however, is expressing reservations about the length of the agreement, according to the source.

Iran, Libya and Venezuela would be exempted from the output cuts due to sanctions or lost production.

What do you think?

Leave a Reply

Your email address will not be published.

GIPHY App Key not set. Please check settings

In Coronavirus Random Tests, Medical Body ICMR Data Shows Big Shift – NDTV News, Ndtv.com

In Coronavirus Random Tests, Medical Body ICMR Data Shows Big Shift – NDTV News, Ndtv.com

Lori Loughlin's Daughters' Infamous Rowing Photos Revealed – E! NEWS, Eonline.com

Lori Loughlin's Daughters' Infamous Rowing Photos Revealed – E! NEWS, Eonline.com