By Adedapo Adesanya
As oil prices continue to hit record lows, the International Energy Agency (IEA) has advised producers of the commodity to further reduce output.
Less than two weeks ago, some oil producers led by the Organisation of the Petroleum Exporting Countries (OPEC) agreed to cut production 9.7 million barrels per day, representing 10 percent of global supply.
But the Executive Director of the IEA, Mr Fatih Birol, noted that, “We continue to see extraordinary turmoil in oil markets in this “Black April” for the industry. The OPEC+ supply cut is a solid start but insufficient to rebalance the market immediately due to the scale of the drop in demand.”
In his suggestions, he said, “That those countries that made the recent decisions to reduce production act as soon as possible and also consider even deeper cuts.
“That financial authorities consider adopting measures to discourage disorderly market outcomes.
“And that countries with strategic oil reserves make capacity available to help take surplus barrels off the market.”
These suggestions each address the problem facing the global economy.
As at April 12, Saudi Arabia and Russia reached an agreement with other oil-producing nations to cut output by 9.7 million barrels per day for the next two months, in an effort to stem a plunge in oil prices brought on by the coronavirus pandemic and feuding between both countries but this has not help the market because of no demand.
And this has brought about disorderly market outcomes, with the US West Texas Intermediate (WTI) oil trading in the negatives on Monday, falling as much as -$40.
OPEC has also rushed to organize a conference call for some ministers on Tuesday to discuss the oil market after WTI plunged into negative territory on Monday, delegates said.
