Oil Exporters Increase Production While Demand Declines

By Alex Mills   March 20, 2020 Sometimes it is difficult to understand the actions of world leaders. A perfect example is the recent decision by Russia to not agree with a proposal by Saudi Arabia to cut oil production further while inventories were increasing. Saudi Arabia responded that it will not decrease production, as it had proposed, but would increase production even though the coronavirus was causing large declines in demand worldwide. Saudi Arabia said it will increase production by 250,000 b/d to 12.3 million b/d, and Russia said it will add another 300,000 b/d taking its production up to 11.5 million b/d. Crude oil markets reacted by driving down U.S. oil prices to $20 per barrel this week on the New York Mercantile Exchange and $26 for Brent crude in London. Crude oil prices began a sharp price decline in 2015 as an oversupply of oil developed worldwide. OPEC members, led by Saudi Arabia, decided to implement production cuts and convinced Russia to cut production, too. It is important to note that all the oil produced by OPEC members is owned by each country and controlled by government officials. Russia, which is not a member of OPEC, also controls the companies and production that operate in Russia. However, independent companies operate in the U.S. without edicts from the federal government.....  
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