Global oil producers have already agreed on the world’s largest ever production cut, but US President Donald Trump has said that cut may soon be doubled, to bring the world “back to business” from the coronavirus pandemic.
The Organization of Petroleum Exporting States (OPEC) and producers outside the bloc agreed on Sunday to cut their output for May and June by 9.7 million barrels per day (bpd), an amount equal to ten percent of the world’s oil supply and the largest such cut in history.
“Having been involved in the negotiation,” Trump tweeted on Monday, “the number that OPEC+ is looking to cut is 20 Million Barrels a day, not the 10 Million that is generally being reported.”
Having been involved in the negotiations, to put it mildly, the number that OPEC+ is looking to cut is 20 Million Barrels a day, not the 10 Million that is generally being reported. If anything near this happens, and the World gets back to business from the Covid 19…..
“If anything near this happens, and the World gets back to business from the Covid 19 disaster, the Energy Industry will be strong again, far faster than is currently anticipated,” he continued.
Trump is not the first person to float a figure of 20 million bpd, or a fifth of global supply. As OPEC+ debated the specifics of Sunday’s cut, sources within the oil cartel told Reuters last week that such a cut was discussed, and the figure appeared in a draft statement seen by the news agency.
While such a steep cut would be doubly unprecedented, it would still not make up for the drop in global demand. The coronavirus pandemic has seen this demand fall by a third, and oil prices reach two-decade lows of less than $20 per barrel at the beginning of April. This drop presented an existential threat to American shale oil producers, who need a price of around $40 per barrel to turn a profit.
Trump, therefore, has pressured the OPEC states into signing off on the cuts. He has also negotiated directly with Russian President Vladimir Putin and Saudi Arabian King Salman, who, against the backdrop of falling demand, have remained locked into a price war for over a month. By flooding the already saturated global markets with cheap oil, Saudi Arabia sought to force competing shale oil producers — like the US and Russia — out of business, Putin said earlier this month.
Trump thanked Moscow and Riyadh on Monday for calling a truce and “getting this very big business back on track.”
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