Saudi Arabia's energy minister Prince Abdulaziz bin Salman on Monday said that effective oil supply cuts by global producers would reach about 19.5 million bpd. This reduction is expected to come from the reduction deal agreed by OPEC+, vowed by other G20 countries, and strategic reserve purchases by the world's largest oil buyers.
The most massive oil supply reduction in history is aimed to prop up prices amid demand destruction due to the coronavirus pandemic. OPEC+ members have committed to reducing their collective production by 9.7 million bpd for May and June. According to Prince Abdulaziz, G20 nations outside the alliance will contribute to 3.7 million bpd of reduction. Meanwhile, major oil importers will purchase some 200 million barrels that will go into their strategic petroleum reserves.
The minister said that Saudi Arabia could lower crude output below its quota of 8.5 million bpd in the coming months if needed. OPEC+ will hold a meeting in June to discuss its next production policy. The planned reduction caused a more than $1/barrel jump in Brent prices on Monday. However, concerns that the reduction might be not enough to ease the glut prevented prices from increasing further.
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Published on April 14, 2020 3:51 PM (GMT+8)Last Updated on April 14, 2020 3:51 PM (GMT+8)
