A video conference meeting last Thursday was held by the Organization of theĀ  Petroleum Exporting Countries and its allies, a group known as OPEC+ are trying to conclude the decision on cutting oil production by 10 million barrels per day(bpd) between May and June 2020.

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The question is why do they want to cut down production?. Apparently the demand for oil has dwindled due to lockdown taking place in almost the whole world because of the scare and spread of coronavirus. Once people are at home they will barely drive their cars, most people are not working outside; they work from home. Most factories that use different types of oil for the engines and machinery have shut down production. Since the demand for oil is low the price was forced to reduce. Coronavirus has approximately reduced oil consumption by 30% and this has contributed to reducing oil prices worldwide.

Further on the content of OPEC+ conference outcome, they will further reduce oil production from 10 million barrels per day to 8 million bpd between July and December 2020. The cycle of output reduction of oil would be further reduced to six million bpd from January 2021 to April 2022.

Prices of Brent crude is presently going for US$31.48 on the world market. A gallon of petrol is now going for the average of GHS18 instead of the previous GHS23.

For the oil price to increase at the world market output should reduce and that is the plan of OPEC+.

Another video conference meeting is scheduled for June 10 to establish deeper decision lines on that based on the behaviour of the market.

 

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