December 4, 2020

OPEC and Russia May Ease Oil Production Cuts

Saudi Arabia, the world’s largest oil exporter, and other major oil-producing countries are likely to increase their output in August, as coronavirus lockdowns ease and demand begins to rise again.

The Organization of the Petroleum Exporting Countries, Russia and other producers are expected to modestly ease the record production cuts that they agreed to in April and later extended through July. A committee of key officials from the Organization of the Petroleum Exporting Countries and Russia will meet on Wednesday by video conference to discuss their approach to the market.

The oil-producing countries want to make sure that they maintain or increase their share of the recovering market.

But analysts say that the actions by OPEC and its allies could be outweighed by the impact of the pandemic on demand. The International Energy Agency said oil demand fell by more than 16 million barrels a day in the second quarter compared with the same period in 2019. The Paris-based group is forecasting a strong recovery but said the spread of the virus in countries like the United States and Brazil and elsewhere “is casting a shadow” over the outlook by raising the prospect of further lockdowns that could discourage driving and other activity.

Total demand for gasoline in the United States rose in early July, a big month for driving, the agency said, citing data from the research firm Kayrros, but it fell in Texas, Arizona and Florida, which have seen recent surges in reported cases of infection.

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“We could be in for a second dose of falling demand,” said Bill Farren-Price, a director at RS Energy Group, a market research firm.

Oil prices have been on a wild ride in the last few months. They plummeted in April into negative territory, despite a deal days earlier by OPEC and the other oil-producing nations for deep cuts in their May and June production, as demand collapsed and the world ran out of places to put all the oil the industry was pumping out. But a month later, as the global economy started to show signs of life and the production cuts by OPEC and producers in the United States began to take effect, oil prices climbed back above $30 a barrel.

In early June, with road traffic, air travel and other activity still depressed, the group, known as OPEC Plus, decided to extend the 9.7 million barrel-a-day cuts through July. The Saudis also reduced production “voluntarily” by another one million barrels a day in June to the lowest levels in three decades.

Unless there is a change in thinking, the production cuts will ease to 7.7 million barrels a day — still a large amount — in August, as agreed in April.

On Friday, Brent crude traded at $43.24 a barrel, still about 35 percent below the level at the beginning of year, and West Texas Intermediate, the American benchmark, was trading at $40.55 a barrel.


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  • Frequently Asked Questions

    Updated July 7, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


The International Energy Agency said it did see some encouraging signs for the oil market. For instance, it said, the amount of oil stored on ships fell in June by about 35 million barrels from record levels of over 200 million barrels in May — a sign that increasing consumption may be beginning to work off the glut that has built up.

An OPEC delegate said that demand was improving globally, especially in China and India, which are major importers and customers for the OPEC countries.

In an interview in April, Prince Abdulaziz bin Salman, the Saudi oil minister, said that Saudi Arabia would go to great lengths to protect the Asian market, the destination of around 50 percent of Saudi oil.

“Nobody is going to fiddle with our backyard, “ he said.