OPEC+ agrees to slash global crude oil output by 9.7 million barrels per day in an attempt to push up prices

With crude oil prices tanking in the face of the Covid-19 pandemic, OPEC, along with Russia and other oil-producing nations agreed to slash their combined output by 9.7 million barrels per day, representing around 10% of global supply.

The expanded oil cartel, known as OPEC+, reached the historic deal on Sunday, which will see the bpd (barrel per day) output from member countries be reduced in May and June. From July onwards, the countries will keep gradually decreasing curbs on production to around eight million bpd until the end of 2020, and to six million bpd from January 2021 through April 2022.

As of April 12, 2020, 7.50pm CST (Central Standard Time), WTI (West Texas Intermediate) crude prices stood at US$24.09 per barrel, while Brent registered US$32.98 per barrel. These prices represent a slight increase since the announcement made by OPEC+, although not by huge margin. At the start of the year, WTI prices stood at around US$61.06 per barrel, while Brent was at around US$66 per barrel.

The drastic drop in prices over the past few months was spurred by an oil war between Saudi Arabia and Russia, which brought a flood of supply just as demand for oil was crippled by the health pandemic. The deal reached by OPEC+ is meant to remedy the oversupply that resulted from the oil war, although it may still not have a significant impact as current crude oil prices show.

Countries around the world have implemented several measures to curb the spread of the virus, which has significantly reduced the demand for fuel and driving down oil prices in the process.

In Malaysia, RON 95 petrol currently retails at RM1.25 per litre, RON 97 at RM1.55 per litre, and Euro 2M diesel at RM1.46 per litre following the ministry of finance’s most recent fuel price update. These prices continue a downward trend that has been ongoing for several weeks, and the last time RON 95 stayed at its ceiling price of RM2.08 per litre was on March 6 – the fuel dropped by 19 sen to RM1.89 per litre on March 7, and continuously declined since.

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