Despite US President Donald Trump’s calls for cuts of 10 million bpd or more, OPEC+ are expected to agree on a “soft cut” of around 4.3 million bpd versus the group’s output in April 2020, JP Morgan said
LONDON: OPEC and Russia this week are likely to agree to cut oil output by about 4.3 million barrels per day (bpd), JP Morgan analysts said in a note on Tuesday, a big increase on their recent cuts of 1.7 million bpd but only a fraction of the demand lost due to the new coronavirus.
Despite US President Donald Trump’s calls for cuts of 10 million bpd or more, OPEC+ are expected to agree on a “soft cut” of around 4.3 million bpd versus the group’s output in April 2020, JP Morgan said.
“While clearly not enough to offset the demand drop… (the cut) would materially lessen the risk of storage being filled and offer a smoother route to working off inventories,” the Wall Street bank said in a note.
Under the cut, Saudi would reduce output by 2.2 million bpd, the United Arab Emirates by around 1 million bpd, Iraq by around 500,000 bpd, Kuwait by 300,000 bpd and Russia by 300,000 bpd.
“The Saudis want to keep pressure on oil prices in order to gain a larger market share and concessions from Washington,” said Christyan Malek, head of European oil and gas research at JP Morgan.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a group known as OPEC+, are planned to meet on Thursday to discuss output cuts after global oil demand and prices sunk due to the impact of the coronavirus and pledges to increase output from Moscow and Riyadh.