BAKU, Azerbaijan, April 22
By Leman Zeynalova – Trend:
The the International Energy Agency (IEA) has made some suggestions to balance to oil market, Trend reports with reference to Twitter page of the IEA Executive Director Fatih Birol.
“We continue to see extraordinary turmoil in oil markets in this "Black April" for the industry. The OPEC+ supply cut is a solid start but insufficient to rebalance the market immediately due to the scale of the drop in demand,” he wrote.
Birol said IEA suggests that those countries that made the recent decisions to reduce production act as soon as possible and also consider even deeper cuts; that financial authorities consider adopting measures to discourage disorderly market outcomes; and that countries with strategic oil reserves make capacity available to help take surplus barrels off the market.
OPEC+ has agreed to a 9.7mn b/d cut, effective May 1. The cut will be held in place until June 30, when it will be reduced to 7.7mn b/d. On January 1 2021, the volume will adjusted down once more, to 5.8mn b/d, and will be held in place until April 30 2022, subject to review at the December 2021 meeting. The OPEC+ cut is being backed by members of the G20, which have committed to support the market's rebalancing. However, this support will not take the form of a coordinated production cut, but will instead comprise a mix of involuntary output declines and strategic stockpiling. The exact volume that will be contributed by the G20 is unclear, but stands somewhere in the order of 5.0mn b/d.
IEA expects that global oil demand will fall by a record 9.3 mb/d year-on-year in 2020. The impact of containment measures in 187 countries and territories has been to bring mobility almost to a halt. Demand in April is estimated to be 29 mb/d lower than a year ago, down to a level last seen in 1995. For 2Q20, demand is expected to be 23.1 mb/d below year-ago levels. The recovery in 2H20 will be gradual; in December demand will still be down 2.7 mb/d y-o-y.
Global oil supply is set to plunge by a record 12 mb/d in May, after OPEC+ forged a historic output deal to cut production by 9.7 mb/d from an agreed baseline level, according to IEA.
As April production was high, the effective cut is 10.7 mb/d. Additional reductions are set to come from other countries with the US and Canada seeing the largest declines. Total non-OPEC output falls could reach 5.2 mb/d in 4Q20, and for the year as a whole output may be 2.3 mb/d lower than last year.
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