Introduction
As revealed in last week’s column, thankfully the “crazy” oil price war has lasted for about one month. It could have been still ongoing, but mercifully for Guyana, on April 12, the OPEC and non-0PEC Ministerial Meeting convened under the joint Chairmanship of Saudi Arabia and Russia arrived at the following agreements: First, the membership reaffirmed one of its foundational principles. That is, they re-committed to their continued participation under OPEC’s Declaration of Cooperation, DOC. The DOC requires: 1) the maintenance of stable petroleum markets worldwide; 2) the protection of the mutual interest of producing members; 3) the promotion of economic efficiency and secure supplies for consumers; as well as 4) preserving a fair return to invested capital.
Second, consequent to this re-affirmation, the Meeting set out details of the adjustments or production cuts members subscribe to, going forward. These adjustments require: first, an overall production cut in crude oil output of 9.7 million barrels per day (bpd), commencing May 1.This lasts for an initial period of two months – to June 30, 2020. Second, the adjustments/cuts for the next period, July 1 to December 31, total 7.7 million bpd. Third, for the next 16 months, January 1, 2021 to April 30, 2022, the production cuts total 5.8 million bpd.
