Oil Production Slashed Worldwide At May 1 Deadline Under Pandemic Pressure
As the world continues to follow social distancing norms and shutdowns, the demand for crude is hit rock bottom, forcing the Kingdom and Kuwait to cut down on their production levels. The production levels were to be reduced from 12 million barrels per day (bpd) to hit its target of 8.5 mbpd.
Kuwait had cut its oil production much before May 1 deadline set by OPEC. Now, many suppliers are also following suit. Further, world’s major energy companies have been guided by the decision made by oil producing nations to control their production, in order prices can be kept stable.
While the oil minister of Kuwait, Khaled Al-Fadhel said earlier that he “felt responsibility to respond to market conditions” and acted early, it seems that they wouldn’t have too much of a choice anyway. Addressing the media via conference video, he added that he was not pressured to reduce output, and Kuwait made a “sovereign” decision.
He however, never disclosed the amount of production cut, but that Kuwait will slash 23% of production by May 1. Both Saudi Arabia and Russia had locked horns over oil prices. But come April and both could come on a common ground owing to the fact the pandemic was attacking everyone in the same way. They joined forces with other oil producing nations along with Organization of the Petroleum Exporting Countries (OPEC) and agreed to reduce global output by 13 percent.
Saudi Arabia and Kuwait have done their bit by following the promise and cutting down on the productions. Norway is going to wait and watch and plans to curtail its production levels in June to 2.5 million barrels a day.
Meanwhile Nigeria is following suit too by reaching out to Chevron and Shell asking them to cut production. Oman has ordered Occidental to reduce its production at each of its fields by a total of 58,000 barrels a day. Also is BP that has been asked to reduce production in locations like the Middle East, Angola and Azerbaijan. All other companies working under joint ventures are gradually trying to manage some bit of production and close down in other places. These include Eni SPA, France’s Total SA, Shell, ConoCo Phillips, etc.