Saudi Arabia Extends Oil Cut
The Kingdom of Saudi Arabia has extended its oil production cut of 1 million barrels per day (bpd) and has indicated that it can be further reduced if needed. This decision was made in response to the recent drop in global oil demand due to the coronavirus pandemic.
Oil Demand Impacted by Coronavirus
The coronavirus pandemic has had a significant impact on global oil demand. In the first quarter of 2020, global oil demand fell by an estimated 9.3 million bpd, the largest quarterly decline in history. This has caused a sharp drop in oil prices, with Brent crude falling from $64.50 a barrel in January to $43.05 a barrel in August.
Saudi Arabia’s Response
In response to the drop in global oil demand, Saudi Arabia has taken a number of steps to reduce its oil production. In April, the kingdom announced a cut of 1 million bpd, which was later extended to the end of July. Now, the kingdom has extended the cut until the end of August.
Saudi Arabia’s Oil Cut Can Be Deepened
In addition to extending the cut, Saudi Arabia has indicated that it can be further reduced if needed. The kingdom has said that it is willing to deepen the cut if other major oil producers, such as Russia, agree to do the same.
Oil Producers Agree to Production Cut
In response to Saudi Arabia’s call for deeper cuts, other major oil producers have agreed to reduce their production. Russia, the world’s second-largest oil producer, has agreed to cut its production by 300,000 bpd. Other major producers, such as Iraq and the United Arab Emirates, have also agreed to reduce their production.
Impact of Production Cut on Oil Prices
The production cut by major oil producers is expected to have a positive impact on oil prices. Analysts predict that the cut could lead to a rise in oil prices of up to $10 a barrel. This would be a welcome relief for oil producers, who have been struggling with low prices for months.
Conclusion
The Kingdom of Saudi Arabia has extended its oil production cut of 1 million bpd and has indicated that it can be further reduced if needed. This decision was made in response to the recent drop in global oil demand due to the coronavirus pandemic. Other major oil producers, such as Russia, Iraq, and the United Arab Emirates, have agreed to reduce their production. The production cut is expected to have a positive impact on oil prices, with analysts predicting a rise of up to $10 a barrel.