Saudi Arabia has said that even more production cuts could be on the horizon, after sealing a 9.7 million bpd production cut over the week from the OPEC+ group, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said on Monday. The G20 group also added to the production cuts.
“We have to watch what is happening with demand destruction and demand improvement, depending on how things evolve,” Abdulaziz said, leaving the topic open for further action from the group.
US President Donald Trump indicated today also suggested that additional cuts could be on the horizon, pointing out that 20 million bpd is closer to what OPEC had in mind for the production cuts.
“Having been involved in the negotiations, to put it mildly, the number that OPEC+ is looking to cut is 20 Million Barrels a day, not the 10 Million that is generally being reported. If anything near this happens, and the World gets back to business from the Covid 19 disaster, the Energy Industry will be strong again, far faster than currently anticipated. Thank you to all of those who worked with me on getting this very big business back on track, in particular Russia and Saudi Arabia.” The US President tweeted on Monday.
A 20-million-bpd production cut would come closer to matching the amount of demand that has been lost due to Covid-19. But other “effective production cut” figures suggest that OPEC’s cut may end up closer to 20 million bpd anyway, given the natural production declines that are bound to happen as a result of shrinking storage for crude oil and depressed prices.
Despite the historic oil production cut over the weekend and talk that it may be larger than indicated, WTI crude was languishing in $22 territory, unimpressed with OEPC’s performance. Brent crude was up to $31.97, a 1.56% gain on the day.
By Julianne Geiger for Oilprice.com
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