Oil output cuts by OPEC and its allies, together with pledges from other G20 nations and purchases by strategic reserves, could remove 19.5 million barrels per day from the market, the Saudi energy minister said.
US President Donald Trump said Monday that the actual output cuts may be deeper than the headline figure of 9.7 million bpd — with top producers considering slashing output by 20 million barrels a day under the deal.
“People are saying 10 million but we think the number they will actually hit is going to be closer to 20 million barrels a day,” Trump said at a press briefing.
He did not give details, but the figures chime with the Saudi breakdown.
The OPEC+ alliance, led by Riyadh and Moscow, agreed on Sunday to slash daily production by 9.7 million bpd over the next two months to arrest a slump triggered by the coronavirus shutdown and a price war between Saudi Arabia and Russia.
Saudi media on Tuesday quoted Energy Minister Prince Abdulaziz bin Salman as saying that G20 producers outside OPEC+ have pledged to cut 3.7 million bpd.
He also estimated purchases for countries’ strategic petroleum reserves for use in emergencies at 200 million barrels over May and June, boosting the total impact to 19.5 million bpd.
Prince Abdulaziz said the kingdom could cut below its quota of 8.5 million bpd if necessary.
According to the deal, Saudi Arabia and Russia will cut 2.5 million bpd each from their production of 11 million bpd in October 2018.
But the minister was quoted by Energy Intelligence as saying that Riyadh will effectively be cutting 3.8 million bpd from current record-high output levels of 12.3 million bpd which were boosted during the price war.
Other Gulf states will be also cutting from recently increased output levels, he said.
“So, in reality, what OPEC+ will be doing effective May 1 will be a total of 12.5 million bpd,” the minister said.
The spread of the coronavirus has hit oil demand hard, with experts estimating that one-third of global demand — which stood at 100 million bpd before the disease — is being wiped out.
“We have to watch what is happening with demand destruction and demand improvement, depending on how things evolve,” the minister said.