The oil market collapsed, and as a result of the coronavirus pandemic, prices fell from $ 65 to $ 34 in 2020. Oil prices recovered from the $ 20 a barrel this week. Brent fell well below the closing level of $ 34.11 a barrel on Friday, or $ 66 at the end of 2019. Fuel demand has declined by about one a third or 30 million barrels a day, as billions of people worldwide restrict their movements.
Finally, OPEC and its allies are working on an agreement for an unprecedented oil production cut, equivalent to about 10% of global supply, with a global effort, including the United States. However, apart from proposing to be an intermediary, the USA did not make a commitment in terms of contributing by cutting production. As a response, it is said that the USA does not accept a move prohibited by antitrust laws, such as accepting domestic production cuts.
However, a global agreement to reduce production by 10 million to 15 million barrels per day will require the participation of countries that do not have state control over production, including the USA, which is now the world’s largest crude oil producer with the contribution of shale.
By the way, Russia expresses the disappointment for a long time that the joint cuts with OPEC only supported costly US shale oil producers.
A meeting of allies like OPEC and Russia is planned to be held on April 6,however, details about the exact distribution of production cuts were poor. According to sources, the urgent virtual meeting will not be held on Monday and will likely be postponed to 8 or 9 April to allow more time for negotiations on crude supply cuts among oil producers. It is also likely to be expected to see if the US is making any efforts to stabilize the markets necssarily.
The fact that the agreement is said to include an alliance that contains the oil producers of OPEC and OPEC + allies and Russia, but excludes oil countries such as the USA, Canada, Norway and Brazil is not considered a satisfactory statement.
Russia said on Friday that the country is ready to cut production along with the OPEC and the United States and still blames Saudi Arabia for the collapse of the market. Saudi Arabia said it was not Saudi Arabia who refused to extend the production cut agreement. In addition, Russia argues that the U.S. understands that there are legal restrictions on output outages, but it still needs to be flexible.
It is also said that Canada would participate in the Monday call, however, Norway refuses to comment.
The International Energy Agency (EIA) warns that a cut of 10 million barrels per day may not be enough to counter the major drop in oil demand, and even with such a cut, stocks may increase by 15 million barrels per day in the second quarter.