While some may think that…
Crude prices fell on Friday…
The United Arab Emirates will cut even more oil production in June, UAE Minister of Energy and Industry Suhail bin Mohammed Faraj Faris Al Mazrouei announced this week.
The production cuts, according to Al Mazrouei, will increase by another 100,000 bpd next month, after already reducing its oi production “in line with the OPEC+ agreement” in May. This comes after the OPEC member increased its production to more than 4 million bpd in April, when Saudi Arabia was also busy adding crude oil into the global supply glut at a time when the world was shutting down in response to the coronavirus, crippling the demand for crude.
Today’s news comes as Saudi Arabia, too, said it would cut beyond its promised cuts next month. Saudi Arabia has pledged as part of the OPEC agreement to cut its production to 8.5 million bpd, but said this week that it would cut to 7.492 million bpd in June, after the Saudi energy ministry ordered Aramco to cut bigger.
Oil prices had rallied earlier on Monday on this news that even more oil production would be taken out of the mix next month. But by 2:30pm ET, WTI had slipped 3.31% on the day, with the Brent benchmark slipping nearly 5% back below $30 per barrel.
Kuwait also announced that it would cut its oil production even more than the OPEC+ agreement called for, by an additional 80,000 bpd in June.
But the move to cut additional barrels by Kuwait, Saudi Arabia, and the UAE was seen not as a positive move, but as an out-of-options move as Middle East producers find themselves without buyers. Today’s announcement of additional cuts could, therefore, spark fear instead of confidence as the market views it as a reflection of the true state of the market.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.