OPEC expects the global economy to recover from the Covid-19 crisis next year and also the oil market, however, it would stay below 2019 levels.

This was the first report in which OPEC accessed the oil market for next year.

According to the OPEC reports, there will be no downside risks materialising in 2021 such as US-China trade tensions, high debt levels or a second wave of coronavirus infections.

OPEC said in the report, “This assumes that COVID-19 is contained, especially in major economies, allowing for recovery in private household consumption and investment, supported by the massive stimulus measures undertaken to combat the pandemic.”

Crude oil prices this year has collapsed significantly after an oil price war erupted between Saudi Arabia-led OPEC and Russia. Also, global demand fell by a third when governments across the globe imposed lockdowns, sealed borders and grounded flights to stop the spread of the virus.

OPEC will also be holding a meeting with its allies today with regard to future level of output cuts. Reportedly, OPEC and its member which include Russia are set to decide whether to extend output cuts of 9.7 million bpd that end in July or ease them to 7.7 million bpd.

Amrita Sen, co-founder of the think tank Energy Aspects told the media, “I think OPEC is betting that some of the wells that were shut in don’t come back due to reservoir damage in non-OPEC countries. But OPEC isn’t immune to declines either.”

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Aramco slashed its selling price for its buyers in Asia by $4.20 per barrel. Interestingly, Aramco raised its selling price for its buyers in the US and Europe.

The decision highlights Aramco’s ambition to continue dominating the market in Asia, where it sells most of its oil.

After an intervention by the US President Donald Trump, both Saudi Arabia led OPEC and Russia agreed to end the oil price war by agreeing to cut production by 9.7 million barrels per day over May and June, with staggered cuts in the months to follow.  Saudi Arabia and Russia also agreed to cut production by 8.5 million barrels a day, each.

The production cut announced by the OPEC, which is formed by 23 members, is the single largest output cut in history. This amount will taper to 7.7 million barrels per day or the remaining six months of the year and to 5.8 million barrels per day for 16 months after that.

US President called for a meeting with OPEC and other oil producers in the world as depleting oil prices were severely hurting the US shale market.

Last month, a negotiation between OPEC and Russia collapsed with regard to cutting production in light of the coronavirus pandemic. Since then, global oil prices collapsed as much as 30 percent, highest in the last two decades.

Since then, producers such as Aramco and Adnoc flooded the market with greater output.

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OPEC and its allies decided to slash oil output by about 10 million barrels a day in May and June.

Representatives of each country met through a video conference and make the decision, which was called for by US President Donald Trump. Due to the oil price war, the US shale companies were severely hit.

Reportedly, Saudi Arabia and Russia, the biggest producers in the group, will each take output down to about 8.5 million a day, with all members agreeing to cut supply by 23 percent.

However, according to recent media reports, Mexico is yet to agree to the deal. Mexico’s Energy Secretary Rocio Nahle Garcia later tweeted that Mexico is not willing to accept the suggested output cut, however, she said Mexico is ready to reduce production by 100,000 barrels a day.

Last month, both parties held a meeting in Vienna, Austria. However, negotiations to cut production in light of the coronavirus outbreak collapsed. This resulted in Saudi Arabia increasing supply to the market and reducing crude oil prices by 10 percent. The UAE too soon followed suit.

This resulted in an oil price war and global crude prices dropping as much as 30 percent, the biggest drop in the last two decades.

During the period between 2014 and 2016, oil producers including Saudi Arabia and Russia engaged in a market share war to squeeze out shale production from the US by reducing prices and offering more supplies to Asia.

The market share war, however, ended in 2016 when Russia and Saudi Arabia called a truce and decided to cut production.

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Petrobras will conduct a thorough study of the well, which was drilled in 1,080 metres of water, 130 kilometre offshore the city of Macaé, to better target exploratory activities in the area.

Petrobras owns a 100 percent in the block, which it acquired in 2018. The oil giant was awarded the block under Brazil’s 5th Production Sharing Round.

The new discovery of oil by Petrobras comes at a time when an oil price war has plunged the price of crude. Also, the world has entered a state of lockdown due to the coronavirus pandemic.

A few days ago, Petrobras announced that it will cut oil production by 100,000 barrels per day by March-end due as the coronavirus pandemic has resulted in reduced demand.

Previously, Petrobras was producing over 3 million barrels of oil equivalent per day (boepd).

Petrobras also becomes the first major state-run oil company to announce a significant reduction in output in response to the coronavirus pandemic.

Responding to the coronavirus outbreak, the oil behemoth also announced the delay of dividend payment and slashed 2020 investments by nearly a third to $8.5 billion. It is also speeding-up reduction of operating expenses, with an additional decrease of $2 billion.

Petrobras’ capex reduction comes after various other major oil companies such as Chevron announced similar measures in response to the coronavirus pandemic.

The Covid-19 crisis has led to significant reductions in the demand for oil products, especially diesel, gasoline, and jet fuel across the globe.

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Àdnoc plans to increase its oil production capacity to 4 million barrels per day (mbpd) at the end of 2020 and 5 mmbpd by 2030. To achieve its target, Adnoc announced a planned investment of around Dh486 billion between 2019 to 2023.

Dr Sultan Ahmed Al Jaber, UAE Minister of State and chief executive at Adnoc, told the media, “Today, as the result of our transformation over the past four years, Adnoc is far stronger, more resilient and better positioned to respond to current market dynamics, including reduced demand and low oil prices. Our strong balance sheet and our globally competitive cost per barrel, which we are constantly optimising, ensures we can continue to enable sustainable development for the national economy.”

“We will continue to invest responsibly and smartly through the downturn with a firm focus on people, performance, profitability and efficiency. In parallel, we will double down on in-country value creation, as well as identify win-win solutions with partners, contractors and suppliers.”

Last month, Adnoc announced its decision to increase its supply to the market to over 4 million barrels of oil per day in April, as global oil prices drastically dropped.

Reportedly, Adnoc is also speeding up its original plan to produce 5 million barrels of oil per day by 2030.

Previously, Adnoc was supplying around 3 million barrels of oil per day to its suppliers.

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He will hold a meeting with the CEOs from Exxon, Chevron, Occidental Petroleum, Devon Energy, Phillips 66, Energy Transfer Partners and former Continental Resources CEO Harold Hamm at the White House.

The meeting comes as US oil producers struggle to breakeven on the back of tumbling crude prices, which is a result of the oil price war started by Saudi Arabia led OPEC (the Organization of the Petroleum Exporting Countries).

Reportedly, the topics to be discussed in this meeting are tariffs on Saudi Arabian oil imports and waivers on rules about transporting oil between US ports. If those rules were waived, ships could take oil products around the country more easily, competing more effectively with the flood of Saudi imports now being shipped into the country.

With regard to the oil price war between OPEC and Russia, US President Donald Trump told the media in a White House briefing, “I have confidence in both that they’ll be able to work it out. The two countries are engaged in a price war. Trump also said he’d meet with oil-industry chief executives, which the Wall Street Journal reported would happen Friday. “We don’t want to lose our great oil companies.”

Earlier this week, US Energy Secretary Dan Brouillette discussed the market with the Russian Minister of Energy Alexander Novak.

Global oil prices plunged drastically earlier this month as Saudi Arabia, which is the world’s top oil exporter slashed oil prices by 10 percent. Saudi Arabia decided to slash oil prices after negotiations between OPEC and Russia collapsed with regard to reducing production due to the coronavirus crisis.

Global oil prices plunged as much as 30 percent since then, highest in the last two decades.

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Reportedly, Aramco is looking to raise capital ahead of its distribution of $75 billion in dividends through 2020 and payments for its $70 billion acquisition of the chemicals producer Saudi Basic Industries.

Aramco could raise around $10 billion from the sale of its stake in its pipeline unit.

Aramco has already held some preliminary discussions with potential advisers on the deal, but talks are still at an early stage.

Previously, Aramco Chairman Yasir Al Rumayyan told the media, “We have a lot of assets that could be monetised because they are non-core assets, which can improve the performance of the company.”

The oil price war and the coronavirus pandemic have heavily affected the company’s spending plans.

Negotiations between Saudi Arabia, which is the unofficial leader of OPEC, and Russia collapsed as the latter did not agree with OPEC’s decision to slash oil production in light of the Covid-19 outbreak.

Earlier this month, Aramco announced that it will increase crude production by 300,000 barrels per day over the company’s maximum sustained capacity of 12 million barrels.

The move to increase crude production is a part of the Saudi government’s plan to stay competitive in the global oil market amid a price war with Russia.

Aramco has also decided to reduce refinery runs in April as well as in May in order to boost oil output. The Saudi government has directed Aramco to continue supplying 12.3 barrels of oil per day.

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