DUBAI/MOSCOW/LONDON: Global oil producing countries have decided to reduce their oil output to more than a fifth as they look towards the US to join their efforts to bring up the price index.
OPEC+ in their statement have said they were waiting for Mexico to sign up the pact after it shied away from the production cut decision. Te output curbs by OPEC+ touch 10mpbd or 10 per cent of global supplies. An additional 5mbpd will come from non-OPEC nations to stabilise the oil market.
Oil demand everywhere has declined by 30mbpd or 30 per cent of global supplies during the economic fallout due to coronavirus pandemic. An unexpected 15mbpd outpit cut will not be enough to stop storage around the world filling up. The US has aggravated the problem by threatening Saudi Arabia with sanctions and tariffs on its produce if it did not fix the oil oversupply problem.
US says its oil output is declining due to low prices and oversupply will make prolong its struggle to keep the prices low. The US President also called the Russians President Vladimir Putin and Saudi King Salman over the issue.
Officials from the Organization of the Petroleum Exporting Countries and Russia have said the scale of the crisis required involvement of all producers.
“We are expecting other producers outside the OPEC+ club to join the measures, which might happen tomorrow during G20,” the head of Russia’s wealth fund and one of Moscow’s top oil negotiators, Kirill Dmitriev, told Reuters.
OPEC and Russian sources said they expected other producers to add 5 million bpd to cuts, although an OPEC+ statement on Thursday made no mention of any such condition.
Brent oil prices, which hit an 18-year low last month, were trading around $32 a barrel on Thursday, half their level at the end of 2019.
