The Organisation of Petroleum Exporting Countries has sent out revised oil market projections to member states that show dire consequences unless they agree to collaborate on an unprecedented 10 million barrels per day of production cuts.
Before all OPEC meetings – and meetings of the broader OPEC-plus alliance – the secretariat normally presents OPEC members with an overview of oil market fundamentals.
Energy Intelligence quoted several sources as saying that the latest such report — prepared ahead of a crucial OPEC-plus video conference meeting on Thursday – sets out two scenarios.
Under the first scenario – which reflects a continuation of the current state of affairs – members of the OPEC-plus alliance would no longer be bound by production constraints.
In particular, Saudi Arabia would stick with its recently implemented plans to produce around 12 million bpd — up from around 9.7 million bpd in the first quarter of this year.
Under the second scenario, OPEC members along with Russia and other non-OPEC producers would implement joint production cuts of 10 million bpd through the end of this year.
It was already known that Saudi Arabia, OPEC’s de facto leader, had called Thursday’s meeting to discuss joint production cuts of that magnitude to offset the impact of a sharp fall in global oil demand as a result of the coronavirus pandemic.
However, the proposed seven-month duration of the proposed deal is new and could lead to further friction between the Saudis and Russia, which has generally favoured a “wait and see” response to the pandemic.
Tensions between the two major producers led to the end of more than three years of OPEC-plus collaboration to support oil prices by curbing production. The alliance’s most recent agreement expired on March 31.
This news was Culled from Punch. Click here to view more.
