Oil Price Soars as OPEC Sharply Cuts Output Amid Coronavirus

Oil price is soaring as OPEC sharply cuts output, according to the ANZ bank. Easing COVID-19 lockdown could bring recovery for the current oil situation.

15 May, 2020, | AtoZ Markets – Saudi Aramco, the world’s largest oil exporter, has reduced the crude supply volume. In June, it will supply at least three buyers in Asia at $ 30. According to Petro-Logistics, exports fell 5.96mb/d in May. Meanwhile, Saudi Aramco said it would reduce 50% of its crude oil sales in the US and Europe.

The International Energy Agency (IEA) said “the global oil market demand is improving with slightly stronger than expected. It expected that oil market demand would increase for the Q2 by 3.2 Mb/d to 79.3 Mb/d.”

OPEC Production Cuts

Oil price soars as Oil production is falling among producers of OPEC and other large producers, known as OPEC +. But the market remains cautious, and the coronavirus pandemic is far from over. New groups are emerging in countries where govt lifts the lockdown.

“Despite the upbeat tone, the IEA acknowledged the uncertain outlook, with the risk of renewed COVID-19 outbreaks still high and question marks over how far OPEC+ production cuts will be implemented,” ANZ said.

OPEC+ already agreed to cut production by almost 10 million BPD, a record amount. OPEC + now wants to extend the overall production reductions beyond May and June, at the next meeting. However, OPEC + ministers will meet via webinar on June 9-10 to assess the market and decide on the next steps. OPEC + reductions are expected to fall to 7.7 million b/d for the second half of 2020, and then to 5.8 million b/d from January 2021 to April 2022.

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