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OPEC oil production

OPEC and partners mulls cutting production for the next three months

They might decide to cut oil output by about 4.3 million bpd

The Organisation of the Petroleum Exporting Countries(OPEC) and its allies are likely to cut production by 4.3 million barrels of oil per day for the next three months, according to media reports.

Recently, US President Donald Trump called for an oil production cut of 10 million barrels of oil per day, however, its more likely OPEC and its allies such as Russia are going to ignore his call.

In a note, JP Morgan said, “While clearly not enough to offset the demand drop… (the cut) would materially lessen the risk of storage being filled and offer a smoother route to working off inventories.”

Saudi Arabia, who is the unofficial leader of OPEC, is expected to reduce output by 2.2 million bpd, the United Arab Emirates by around 1 million bpd, Iraq by around 500,000 bpd, Kuwait by 300,000 bpd and Russia by 300,000 bpd.

According to media reports, top officials from OPEC countries are going to have a video conference with regard to the oil production cut this Thursday. Russia’s energy ministry has also been invited by OPEC to take part in a video conference.

The meeting was scheduled to take place on Monday, however, Saudi Arabia, which is one of the major exporters of crude oil, and non-OPEC member Russia, were not on the same page.

Last month, negotiations between OPEC and Russia collapsed with regard to production cut in light of the coronavirus pandemic. This resulted in an oil price war as countries such as Saudi Arabia and UAE increased production and reduced global oil prices.

Crude oil prices fell as much as 30 percent.

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