Oil markets in intensive care: an incentive to decarbonate? Perspective from Saudi Arabia

On 12 April 2020, the Organisation of the Petroleum Exporting Countries (OPEC), along with Russia and other non-member oil exporting countries, agreed to a record oil production cut of 9.7 million barrels a day (mb/d) in an attempt to ease a global supply glut and boost crude oil prices. This decision was made against the backdrop of the global Covid-19 pandemic that has caused a steep reduction in the demand for crude oil and led to a drop in oil prices. These curbs will stay in place for May and June, after which they will reduce to 7.7m b/d for the rest of the year, and then 5.8m b/d from January 2021 to April 2022 if compliance with the quotas is enforced. Many experts remain legitimately concerned with the global demand decline as the International Energy Agency (IEA) predicts an overall demand drop of 9m b/d in 2020 (29m b/d reduction for April alone) compared to 2019, erasing almost a decade of growth. However, this short-term surplus of oil shouldn’t overshadow the structural issues of oil markets and the concerns regarding future oil supplies. 

Continue reading “Oil markets in intensive care: an incentive to decarbonate? Perspective from Saudi Arabia”