Middle East oil producer Abu Dhabi National Oil Co (ADNOC) has informed term buyers it will reduce the supply of crude in May for all four crude grades, two sources with direct knowledge of the matter told Reuters on Tuesday.
ADNOC will cut the supply of its Murban and Upper Zakum crude by 15 percent in May, and reduce the supply of its Umm Lulu and Das crude by 5 percent, the sources said, citing a letter issued by ADNOC to buyers on Tuesday.
ADNOC could not be immediately reached for comment.
The move followed agreement of a record cut in output by the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia to prop up oil prices amid the coronavirus pandemic.
As billions of people around the globe stay at home to slow the spread of the virus, physical demand for crude is drying up, creating a global supply glut. Refiners are processing much less crude than normal, so hundreds of millions of barrels have gushed into storage facilities worldwide.
“As directed by the UAE Government and in line with the recent OPEC+ agreement, ADNOC has committed to reduce its oil production,” the producer said in the letter to buyers.
In a similar move, top Gulf oil exporter Saudi Aramco has allocated around 4 million barrels per day of crude oil to its Asian customers, which is lower than its full contractual volumes to Asia by about 2 million bpd, a Saudi oil source familiar with the company’s plans told Reuters last Friday.
Oman has also told its oil producing companies to cut 200,000 barrels per day starting from May 1 until the end of June and will inform its customers of the same plan, its oil ministry said.
US crude oil futures collapsed below $0 on Monday for the first time in history, ending the day at a stunning minus $37.63 a barrel as desperate traders paid to get rid of oil.