While economic activity in the oil market is beginning a gradual recovery, major uncertainties remain and the biggest is whether governments can ease the lockdown measures without sparking a resurgence of COVID-19 outbreaks, according to IEA’s monthly Oil Market report.
OPEC agreed to cut oil output by a record 9.7 million barrels per day, about 10% of global supply, for the months of May and June, followed by another agreement of extending the duration of the proposed 1.5 million barrel per day cut until the end of 2020, instead of 30th of June 2020.
The US Energy Information Administration (EIA) has focused on several underlying assumptions about OPEC’s posture regarding targeted production output and what effect it may have on global oil balances and prices.
ADNOC, UAE’s oil giant, stated that it will boost its efforts and produce more oil, aiming to increasing the supply to over 4 million barrels per day in April 2020, following the collapse of the OPEC+ agreement and the oil price war between Saudi Arabia and Russia.
In view of the ongoing oil demand situation and the disruption brought by coronavirus, OPEC recommended extending the duration of the proposed 1.5 million barrel per day cut until the end of 2020, instead of 30th of June 2020, as previously announced.
In case Brazil joins OPEC (Organization of the Petroleum Exporting Countries), OPEC would be the clear winner and Brazil the loser by a long shot, energy research firm Rystad Energy said commenting a recent statement by Brazil’s president Jair Bolsonaro that he would like to see Brazil join OPEC.
OPEC published its World Oil Outlook (WOO) for 2019 on November 5th, at the Wiener Börsensäle in Vienna, Austria. The report entails medium to long-term projections and assessment for the global oil and energy industry, as well as for the shipping industry, for which it says that the impact of IMO regulations will be less severe than previously expected.
The effect of new IMO 2020 regulations will be one of the key three essential factors expected to determine the direction of the oil price next year, according to research firm Rystad Energy. A balanced oil market in 2020 is contingent also on a no-global-recession and continued OPEC production cuts.
According to Gibson Shipbrokers, OPEC+ announced the expansion of their product cuts for additional nine months until the end of the first quarter of 2020. Yet, the OPEC cuts are a negative development concerning Middle East’s tanker market, mostly affecting VLCCs.
As OPEC and OPEC+ meet in Vienna, the outlook for the market is mixed, according to Ann-Louise Hittle, vice president, Macro Oils, at Wood Mackenzie energy consultancy. Geopolitical risk means the supply outlook is tightening, offsetting the moderate weakening in oil demand growth thus far this year, she said.
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