InvestorQ : How much is the OPEC planning to cut crude production in the month of June 2020? How would it impact the oil prices?
Mary Joseph made post

How much is the OPEC planning to cut crude production in the month of June 2020? How would it impact the oil prices?

Answer
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4 months ago


I agree with Sara that Mexico is unlikely to have a major impact on the oil supply as it is a small player. However, the real factor will be pick up in demand for oil. Unless that picks, there is unlikely to be any extension of the supply cut. At least Russia has already made it clear that would not want to participate if benefits of the supply cut are not visible in two months time frame in the form of higher prices.


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preetam lenka answered.
4 months ago


OPEC and non-OPEC allies, a group of oil producers sometimes referred to as OPEC, had been expected to hold their next meeting on Thursday.

However, while OPEC kingpin Saudi Arabia and non-OPEC leader Russia were thought to have tentatively agreed on a one-month extension to production cuts, S&P Global Platts reported on Wednesday, citing unnamed sources, the date of a meeting to finalize the deal remains uncertain.

Analysts at research firm Eurasia Group believe the upcoming OPEC meeting will “probably” see the energy alliance agree to extend the commitment to reduce oil production by 9.7 million b/d from July to September.


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sara Kunju answered.
4 months ago


OPEC and Russia have jointly pledged to continue their oil production cuts by another 2 months till the end of July 2020. The original decision was to enhance production cut from 7.7 million bpd to 9.7 million bpd for the months of April and May. In June, the plan was to revert to 7.7 million bpd but OPEC and Russia want to continue the supply cuts for another 2 months till end of July. The one country that is refusing to buy into this extension is Mexico. In March, Mexico had insisted that its production cut target be reduced from 400,000 bpd to 100,000 bpd. Now, Mexico is not willing to cut output even by 100,000 bpd. This may not be too material from a larger perspective but this could be sign of widening rifts between the members of OPEC and the non-member participants like Mexico and Russia. For the time being, the deal stays till the end of July but demand needs to pick up by then, otherwise the group would really find it hard to sustain these output cuts. OPEC and Russia are looking at a sustainable Brent crude price of $50/bbl.