Will the OPEC+ Agree to Oil Production Cuts?
According to a recent report on Reuters, OPEC and allies are nearing a decision to cut oil production in the wake of the coronavirus pandemic, but are keen to have the US also contribute with similar moves. Markets are widely expecting not only a resolution to the Saudi Arabia-Russia price war but also a decision on production cuts at the latest OPEC+ meeting due to take place this Thursday.
As a result of the lockdowns and travel restrictions across several countries, global oil demand has already fallen by around 30% so far, which has driven crude oil prices weaker lately. Crude oil prices received a severe blow last month after Saudi Arabia announced that it would boost oil production and cut its official selling price even amid declining demand.
After several weeks of heightened worries about potential supply glut in global oil markets, now OPEC and its allies appear keen to discuss measures to stabilize supply against falling demand. However, sources indicate that leading oil producers are also keen for the US to commit to curbing oil production.
This development has so far been refuted by US President Donald Trump who stated on Monday that he has not yet received such a request from OPEC members. However, Trump did signal that oil production has already come down in the US as demand dips globally.
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