OPEC+, G20 Produce A Very Dim Light At The End Of A Long, Dark Oil Price Tunnel

After the OPEC+ countries produced an oil supply reduction agreement on Thursday that amounted to a half-measure at best, industry observers had pinned some hope on a firm commitment to further cuts coming from G20 call that took place on Friday. Those hopes were not fulfilled, as the G20 communique included only vague language indicating those nations would work towards “market stability.”

The language in the comminique reads as follows: “We commit to ensure that the energy sector continues to make a full, effective contribution to overcoming COVID-19 and powering the subsequent global recovery. We commit to work together in the spirit of solidarity on immediate, concrete actions to address these issues in a time of unprecedented international emergency. We commit to take all the necessary and immediate measures to ensure energy market stability.”

In this political season in the U.S., that reads like issue-specific talking points from a candidate trying to say something to placate the public and media without really taking either side of the issue.

Leaving matters even more up in the air, Mexico refused to commit to its full share of the OPEC+ cuts, saying it could only reduce its own production by 100,000 barrels of oil per day (bopd). U.S. President Donald Trump intervened to commit to his country to supporting Mexico’s part of the deal by supplying 250,000 bopd in cuts of its own, but left the process of how he would achieve that level of firm supply reduction unclear. This is a key question since the national U.S. government has very limited power to force firm reductions in production by the private companies that operate all wells in the country.

Canada, which has not been a participant in any previous efforts to control supply, also remained non-committal in terms of committing to any firm reductions of its own.

Read the Rest at Forbes.com

1 thought on “OPEC+, G20 Produce A Very Dim Light At The End Of A Long, Dark Oil Price Tunnel

  1. Jimmy MacAfee - April 11, 2020

    Remember the day when they said all the oil was going to run out – soon?

    It isn’t just a matter of new extraction: oil was treated like diamonds, if anyone is aware of the actual supply of diamonds compared to the numbers they allow on the market.

    I suspect that this won’t kill oil, as OCrazio and others hope, just the opposite. Short term, though, producers will feel some pain. Main thing is to keep the UN from attempting to “Internationalize” all oil and gas – which is what could happen in Globalists get their way.

    If I were a US oil producer, I’d still be investing in ways to extract even cheaper, if possible.

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