Voluntary additional cuts by Saudi Arabia, UAE and Kuwait of oil production are due to last for only one month, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said during an OPEC webinar with journalists on Monday.
The Organization of Petroleum Exporting Countries (OPEC), Russia and allies, a group known as OPEC+, agreed on Saturday to extend record oil production cuts until the end of July, prolonging a deal that has helped crude prices double in the past two months by withdrawing almost 10 percent of global supply from the market.
“The voluntary cut was for one month … it did serve its purpose,” Prince Abdulaziz said during the webinar.
When asked how compliance would be enforced among OPEC+ member countries, the minister said that it was up to each member country to enforce its own cuts, but that there was “no room whatsoever for lack of conformity.”
“We are all voluntary contributing to these reductions as a way to stabilize this market … The implementation will be self imposed,” he said.
Oil has had a chaotic year as the coronavirus has evaporated demand for petroleum products as governments effectively shut down economies with lockdown measures to combat the spread of the virus.
“We are still in crisis mode,” Prince Abdulaziz said.
Prices for US crude fell in negative territory in April as fears ran rampant that storage capacity for crude would run out amid the chronic market oversupply caused by the coronavirus pandemic prior to the OPEC+ oil cut agreement.
US shale oil producers have been pushed to the brink by the fall in oil prices, with some falling to bankruptcy and others closing down production.
“Saudi Arabia had no interest to impact any producer in the whole world, these are tough decisions to be made and do impact lots of people, lots of communities,” Prince Abdulaziz noted when asked about how the Kingdom’s decisions are effecting the US oil market.