By Adedapo Adesanya
Worries that a demand recovery would slow due to a resurgence of coronavirus cases led to a drop in the price of crudes belonging to members of the Organisation of the Petroleum Exporting Countries (OPEC) on Thursday.
The weighted average basket of 13 crudes stood at $45.17 a barrel compared with $45.34 the previous day, according to OPEC Secretariat calculations released on Friday.
Although a pledge from OPEC member, Iraq, to cut oil output further in August provided support but was not enough as the basket dropped 0.37 per cent or $0.17.
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea), and Rabi Light (Gabon).
Others are Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Iraq has been a laggard in fully meeting its pledge and it hopes to meet up with what it failed to do for the past three months.
Iraq only cut production by 11,000 barrels per day in July and has promised to cut by 400,000 barrels per day in August and September.
“The plan is to make an additional reduction in compensation for what has not been achieved during the past months of the life of the agreement, up to the limits of (400) thousand barrels per day during the coming month of August, in addition to the reduction stipulated in the agreement,” the Middle-East country said in a statement.
Over the week, a weaker US dollar had helped to support prices by making the commodity more attractive to buyers holding other currencies.
In other OPEC related news, preliminary data showed that Kazakhstan fulfilled its obligations under the OPEC + agreement.
Daily oil production in Kazakhstan in July amounted to 1.313 million barrels per day or 101 per cent of the country’s obligations to cut oil production under the OPEC+ agreement.
According to the agreement under OPEC +, Kazakhstan’s obligations to reduce oil production in July 2020 was 1.319 million barrels per day.
“Thanks to participation in the transaction, all market players came to a controlled and smooth reduction in oil production, which in turn had a positive impact on the global oil industry,” Kazakhstan’s Energy Ministry said.
In April, Kazakhstan joined the new obligations under the agreement between the OPEC+ member countries to collectively cut oil production by 9.7 million barrels per day in May-July 2020.
In order to avoid the risk of oil overstocking in storage facilities, Kazakhstan’s Department of Energy decided to limit production at medium, large and giant fields, the ministry said, adding that a fair distribution of obligations to reduce oil production for all types of fields was provided.
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