OPEC, Russia and other allies have set plans to cut oil production by more than a fifth on Thursday and mentioned they expect the U.S. and other producers to participate in efforts to increase prices caused by the coronavirus crisis. Discussions among top global energy ministers will continue with an extraordinary meeting on Friday at 12.00 GMT with video conferencing to outline the final agreement.
The limitation of the amount of production planned by OPEC + is 10 million barrels per day (bpd) or 10% of the global supply; the other five million bpd of oil cut is expected from other countries in order to support the deal against the oil crisis. The deal is said to depend on Mexico’s participation in the cuts.
Global fuel demand has dropped to around 30 million bpd or 30% of global supply. However, even the projected 15 million bpd cut may not remove enough crude oil to stop storage facilities from filling up quickly.
Brent oil prices, which reached the lowest level in 18 years last month, on Thursday, it was traded around $ 32 a barrel as much as half of its late 2019 levels.
It is said that OPEC + will decrease production by 10 million bpd in the May-June period, while Saudi Arabia and Russia will reduce 2.5 million bpd and Iraq by 1 million bpd, while all members will reduce production by 23%. According to the plans, OPEC + then will relieve 8 million bpd cuts from July to December and 6 million bpd from January 2021 to April 2022.
The US, whose output began to exceed Saudi and Russian production, was invited to OPEC + talks Thursday, but it was unclear whether he attended the video conference. Brazil, Norway and Canada were also invited.
Other countries, such as the USA, Canada and Brazil, who have a positive approach to the OPEC + production cut agreement, should find the cure in their own way, using their own approach, based on their national circumstances.
US officials states that US production would naturally drop for more than two years, but they did not make any deliberate cut.
The U.S. may order many private companies to limit production under rarely used instructions. Oil regulators in Texas, the largest producers in the US, will meet on April 14 to discuss possible cuts.