After Saudi Arabia said it would increase supply curbs in June, oil prices rose yesterday. For a longer period than originally agreed, other members of the OPEC said they want to extend the deep cuts reached in April.
In response to the 30 percent drop in fuel demand worldwide, OPEC+ decided in April to cut output by 9.7 million bpd for May and June. OPEC+ was expected to downsize that cut to 8 million bpd. Instead, industry sources said they expect OPEC+ to maintain the larger reduction.
While Brent crude futures settled at $29.98 a barrel (gaining 1.2%), US WTI crude futures settled at $25.78 a barrel, up 6.8%.
Saudi Arabia will reduce output by another 1 million bpd next month, reducing total production to 7.5 million bpd, the kingdom said on Monday. The amount is down nearly 40 percent from April. Slashing an extra 180,000 bpd in total agreed by the UAE and Kuwait.
In large and mid-sized oil fields, producers have been ordered by Kazakhstan to slash output in May to June by about 22 percent. In line with the OPEC+ deal, the output from Russia’s western Siberia is expected to fall by 15 percent this year.
A drop by 8.1 million bpd to 92.6 million bpd expected for worldwide oil demand. A drop of 540,000 bpd to 11.69 million bpd expected from US supply in 2020. Total world supply in 2020 expected to be 95.2 million bpd.
