The new agreement reached within the OPEC+ will not stop the reduction in demand for oil due to restrictions because of COVID-19 pandemic, Report informs referring to FT.
In addition, as the production won’t be cut until the end of April, the output can also be completely stopped because the oil pipelines and storehouses will be filled.
On Sunday, the OPEC+ participants reached an agreement to reduce the output by 23% (9.7 million barrels) in May-June, 18% (7.7 million barrels) from July until the end of 2020, and 14% (6 million barrels) from January 2021 till April 30, 2022. Russia and Saudi Arabia will calculate the output cut from the level of 11 million barrels. At the same time, the remaining quota for Mexico, which will cut the production by only 100,000 barrels, will be compensated by the U.S.