Oil & Gas

13 Jul 2020

OPEC and Russia May Ease Oil Production Cuts

13 Jul 2020  by Stanley Reed   

Saudi Arabia, the world’s largest oil exporter, and other major oil-producing countries are likely to increase their output in August, as coronavirus lockdowns ease and demand begins to rise again.

Storage tanks behind the oil refinery in Omsk, Russia. In April, Russia, Saudi Arabia and other producers agreed to cut production by a record 9.7 million barrels a day.Credit...Alexey Malgavko/Reuters

The Organization of the Petroleum Exporting Countries, Russia and other producers are expected to modestly ease the record production cuts that they agreed to in April and later extended through July. A committee of key officials from the Organization of the Petroleum Exporting Countries and Russia will meet on Wednesday by video conference to discuss their approach to the market.

The oil-producing countries want to make sure that they maintain or increase their share of the recovering market.

But analysts say that the actions by OPEC and its allies could be outweighed by the impact of the pandemic on demand. The International Energy Agency said oil demand fell by more than 16 million barrels a day in the second quarter compared with the same period in 2019. The Paris-based group is forecasting a strong recovery but said the spread of the virus in countries like the United States and Brazil and elsewhere “is casting a shadow” over the outlook by raising the prospect of further lockdowns that could discourage driving and other activity.

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