Countries part of the OPEC+ group are discussing the idea to implement oil production cuts for at least three months from May to July, Russian news agency TASS reported on Tuesday, citing two sources at OPEC.
“Three months. I believe the deal can be made from May because April deliveries have already been scheduled,” a high-ranking source in OPEC told TASS, while another source noted that a potential production cut would be “definitely longer than until June.”
Russia’s energy ministry has received an invitation from OPEC to take part in Thursday’s video conference, and Russia confirms it will take part in that meeting, an official at the energy ministry told TASS on Tuesday.
The leaders of the OPEC+ group, Saudi Arabia for OPEC and Russia for non-OPEC, are reportedly ready to negotiate a massive global production cut amid sinking demand, despite a bitter weekend spat between the former allies about who ditched whom in the OPEC+ talks.
A video meeting between Saudi Arabia, Russia, and other major oil producers, including representatives from the U.S., was slated to be held on Monday. However, the meeting was postponed for Thursday after the Saudis and the Russians accused each other of dumping the other in the OPEC+ alliance that had tried to manage oil supply and oil prices for the past three years.
Both producers are now signaling that they are ready to talk but are pointing out that any massive cut, 10 million bpd-15 million bpd, as touted by U.S. President Donald Trump, should involve the United States, too. Related: Big Oil Raises Debt To Ride Out Price Crash
OPEC hasn’t asked President Trump to find a way to ask U.S. oil companies to collectively cut production, the President said on Monday.
“I think it’s happening automatically but nobody’s asked me that question yet so we’ll see what happens,” President Trump said at a press briefing, referring to U.S. oil production.
Analysts say that even if a larger so-called OPEC++ group – involving OPEC+ plus the U.S., Canada, Brazil, Norway, and other producers not part of OPEC+, were to agree to a huge cut of 10 million bpd, this will still be much lower than the demand loss expected in Q2 and will not go far to prevent global storage filling to the brim by mid-May.
By Tsvetana Paraskova for Oilprice.com
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The country have been buying up so much crude oil in the last few weeks and the coming weeks that they won’t have enough state-owned storage to hold it all. According to interviews with industry insiders who asked Bloomberg to maintain their anonymity, Beijing has plans to use commercial storage space as well, while also reaching out to the private sector to encourage them to fill their own tanks with cheap gas as part of a nationwide contingency plan.
With such huge secret buying from China together with the proposed global cuts in production of 15-20mbl per day, will see the 30mbl short in demand easily reduced between 20- 25mbl. Hence closing the short in demand gap to about 5mbl. Something more sustainable for Saudi Aramco to announce crude oil price in May to be at more palatable level at US$35-40pbl. This is a GLOBAL corrobative effort which include Saudi, Russia, USA, OPEC+, APPO, G20 and other non-OPEC+ (basically the world).