The Saudi Energy Minister Abdulaziz bin Saud had threatened OPEC members of Nigeria,Angola and Iran to get their production cuts compliance in order or else the price war would ensue, the reports on oilprice.com said earlier this week. Saudi cited they would throw discounts on these three countries key markets if they keep on producing above their qoutas although OPECs brent crude production gravitated to its lowest in 30 years at 22.69 millions bpd.
Saudi Arabia vowed to cut their production by a further 1 million bpd making up almost 30% of the 9.7 million bpd of OPEC+cut. The production qouta left most oil producers frustrated as UK, Russia and others have been struggling to cope and comply. Some economies like Russia have their economy heavily reliant on the oil production which makes it stone-hard for them trim off their production to aid in pushing up the oil price back to its conventional levels albeit one of the largest producers Saudi Arabia doing enough for the oil market.
Since coronavirus stormed into the global economy, the oil price has been struggling to steady as a result of lockdowns imposed worldwide leaving a plummeting oil demand pressing the prices below $20. As per the agreement, the cuts will be relaxed from 9.7 million bpd to 7.7 million bpd post July extension leaving us with a prospect of oil price war on the cards and a question of whether Saudi Arabia will have a further extension because they can produce oil cheaper granting them a space to sell it cheaper
By: Erasmus Boshomane
Email: eboshomane7@gmail.com
