Russia And Saudi Arabia Consider Even Deeper Oil Output Cuts

Russia and Saudi Arabia may be ready to enact deeper oil production cuts to stabilize prices, the energy ministers of the two countries said in a joint statement. The two will “continue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary,” the statement said as quoted by Bloomberg. Last week, OPEC+ agreed to remove 9.7 million bpd of oil from the market, with the cuts beginning next month and remaining in effect until the end of June, after which the group will start to ramp up production gradually. However, demand has continued to fall sharply because of the Covid-19 pandemic. Oil consumption in the United States alone—the world’s largest consumer of oil—has dived by a third, Reuters’ John Kemp wrote in his weekly column. Even though there is talk about reopening the economy, this will most likely happen gradually, as in Europe, and it will be at least a few months until demand begins to recover in any meaningful way. Meanwhile, oil inventories are on the rise. The federal U.S. government was this week reported to be negotiating leasing space in the Strategic Petroleum Reserve to nine oil companies that have nowhere else to store their unsold and temporarily unsellable crude...MORE