03.06.202012:15 Forex Analysis & Reviews: Oil production is declining at a record pace, however, not all OPEC + countries are ready to take this step

Due to the coronavirus pandemic, the energy market is shaken, therefore, in order to keep a balance in the market, the organization of oil exporting countries reduced oil production by three quarters. Nigeria and Iraq, in turn, broke the statistics, not meeting the established quotas.

OPEC complies with the requirements

An unprecedented fall in demand for fuel caused a record decline in oil production. Some OPEC + countries will reduce production jointly by 9.7 million barrels per day in May and June. The representatives of the coalition should discuss further measures to stabilize the market soon. One of the issues will be to extend the agreement on reductions for a few more months, because extra billions of barrels have accumulated during the pandemic, which must be removed from the market.

The lowest oil production rate since the beginning of 2020 was in May - OPEC reduced production by 5.84 million barrels per day to 24.6 million barrels.

To restore the market as soon as possible, Saudi Arabia reduced production by 2.89 million barrels per day to 8.7 million. The United Arab Emirates and Kuwait promised to reduce jointly another 1.2 million barrels this month.

But some are behind

However, Iraq and Nigeria do not comply with the agreement as wished it to be. Iraq fulfilled its obligations by 42%, and Nigeria only by 34%. The results are not impressive. In the past, such situation has already been observed, OPEC countries criticized Iraq and Nigeria for their behavior.

The date of the conference, which will be held online, is still being agreed, tentatively on June, 4, as OPEC Chairman and Minister of Energy of Algeria Mohamed Arkab suggested. Ministers will discuss the possibility of extending production restrictions for another two months. Subsequently, the countries will reduce volumes to 8 million per day until the end of the year.