Singapore (May 12): Following a steep drop in crude oil prices stemming from the Covid-19 demand shock, crude oil futures markets looked up slightly this morning as Saudi Arabia is expected to announce further production cuts this June. 

A Saudi official announced on Monday that the Kingdom intends to cut production by a further 1 million barrels in addition to agreed cuts with Organisation of the Petroleum Exporting Countries (OPEC). While this commitment will not completely rebalance present crude oversupply, other petrostates may follow suit - Kuwait and the UAE have already committed to decrease production by 180,000 barrels per day. This follows an earlier agreement between Russia and OPEC to cut oil production in April 2020 following a damaging price war. 

“This brings the total production cut that will be carried out by the Kingdom, to around 4.8 million barrels per day, from the April production level,” said the official. “The Kingdom’s production for June, after both its targeted and voluntary cuts, will be 7.492 million barrels per day.” Saudi Arabia also encouraged other petro-states to comply with agreed production cuts as well as implement voluntary cuts to alleviate storage shortages and stabilise global oil markets. 

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