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Saudi Arabia is planning to reduce oil supplies in the Asian market, and reduce exports to Europe and the United States in June.
The largest member of OPEC is committed to supporting a preliminary recovery in the crude oil markets, following the worst oil crisis in decades. Residents of Saudi Arabia voluntarily reduced supplies to the lowest possible level in 18 years, and are now conducting global efforts to eliminate the surplus, which cut the prices more than half this year.
"It is politically important for the United States and Trump that the Saudis will send less oil to the Atlantic basin," said Olivier Jacob, managing director of PetroMatrix in Zug, Switzerland. "It's also a gesture towards the Russians that the Saudis are not going to destroy the European market," he added.
Reducing sales in the US could benefit Trump, who is seeking to protect jobs in the US oil industry, especially before the election. The president was initially planning to introduce tariffs on Saudi oil imports, which played a role in the reduction of Saudi shipments to the United States.
Trump said that oil prices were rising this week, due to a decrease in Saudi supplies. "Our great energy companies with millions of jobs are already looking positive," Trump wrote on Twitter.
Iraq, the second largest producer of OPEC, is also limiting supplies to Asia. The third and fourth largest group members, the United Arab Emirates and Kuwait, also promised that they would make additional production cuts beyond what was agreed by the OPEC.
According to the US Energy Information Administration, US crude oil production will decline not only in 2020, but also in 2021.
In its short-range energy forecast for May, EIA predicted that US crude oil production will average 11.7 million barrels per day (barrels per day) in 2020, and 10.9 million barrels per day in 2021.
The EIA claims that changes in crude oil prices lead to changes in crude oil production, as these components are directly proportional, and the graph of the curve changes gradually over six months. This year, however, everything will happen unpredictably, because of the sharp drop in demand and the already begun global decline.
The forecast for crude oil production is very uncertain. In addition, OPEC members (OPEC), as well as other partner countries have announced a significant reduction in production until 2022.
The demand for oil will of course affect prices, as well as investment decisions of US producers.
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