OPEC+ contemplates continuing output curbs amid slackening demand
OPEC + countries, who are expected to hold a virtual meeting on June 4 , are considering continuing the crude oil output curbs imposed in April. The decision has been backed by the world’s leading oil producer, Saudi Arabia and its Gulf allies. As per the Bloomberg report, the tap on oil production is most likely to continue on for next one to three months, instead of relaxing the limit from July 1, as decided earlier.
The oil prices have hit an all time low due to the ongoing imbalance between the supply and demand, caused by coronavirus outbreak. This week”s meet would mainly focus on negotiations between Moscow and Riyadh as Russia wants to continue with the ongoing deal, to go ahead with lifting of production controls.
Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd, said, “The Saudis are clearly looking for support from other members to keep production levels lower for longer.”
As per the existing deal, the 23-nation group of oil exporting countries in a historic move decided to reduce output by 9.7 million barrels a day, or about 10% of global supply, for May and June. Besides, Saudi Arabia, Kuwait and the United Arab Emirates decided to make extra voluntary cuts of about 1.2 million barrels a day for June, adding the total OPEC+ cuts to almost 11 million barrels a day. As per the current deal, these cuts are to be relaxed to about 7.7 million barrels a day in July, followed by further easing at the start of 2021.
The meeting is to decide the future course of production curbs or relaxations as Riyadh wants the cuts to continue but Moscow wishes otherwise. The demand is anticipated to be low despite lifting of lockdown among most of the nations across globe as many anticipate second-wave of the deadly virus to hit. Nigeria and UAE are also hoping for easing limits as they have already announced increasing production and exports next month. During the Monday conference, when asked about Russia’s stance about the production cuts, Kremlin spokesman Dmitry Peskov told reporters: “Let’s not get ahead of ourselves.”