OPEC+ members to reduce production by 2.31m extra bpd to curb oversupply

*Nigeria, Iraq, others exceed agreed production cut quotas by 50,000 barrels per day (bpd) from May to July ─Report

*OPEC+ forecasts global oil demand to decline by 9.1 million bpd for the rest of 2020

Isola Moses | ConsumerConnect

As the international oil market still remains uncertain over the OPEC+ deal as prices react positively, the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, have said some members would have to reduce the group’s total production by 2.31 million additional barrels per day so as to manage its oversupply issues.

Reuters reports this was disclosed through an internal OPEC+ report over the oversupply between May and July 2020 which should be compensated from August through September of the year.

It was learnt that Saudi King Salman bin Abdulaziz spoke with Nigeria’s President Muhammadu Buhari Wednesday, August 19 on the need for the latter’s country to comply with its OPEC+ production quotas.

Nigeria, Iraq, and other non-compliant members were placed on extended cuts just before the cartel’s meeting this week.

According to report, OPEC data for the period of May-July indicated that Nigeria, Iraq and others did not comply with their production cut quotas for the period.

The oil-producing countries were said to have recorded overproduction of 50,000 barrels per day for the period.

Russia, for instance, overproduced by 280,000 bpd while Kazakhstan overproduced by 190,000 bpd within the period under consideration.

Recall that OPEC+ agreed to production cuts of 9.6 million barrels after record lows in April.

Following the rebound of oil prices to above $40, the group plans to limit production cuts by 7.7 million bpd this month.

However, with the new report revealed by Reuters, total production cut would settle at 8.85 million bpd if the additional 2.31 million bpd are added to OPEC production numbers.

The report also forecasts global oil demand to decline by 9.1 million bpd for the rest of the year, 100,000 higher than OPEC’s previous prediction. The group expects oil demand decline to rise to just 7 million bpd by 2021.

Meanwhile, in the case of no vaccine and longer COVID-19 outbreaks in Asia, North America and Europe, OPEC+ forecasts demand to decline by 11.2 million bpd for the rest of the year, report added.