Economy, Energy

US: Crude oil production to fall 2-3M bpd this year

World's largest crude producer can open up strategic petroleum reserves to take surplus off market

Ovunc Kutlu   | 11.04.2020
US: Crude oil production to fall 2-3M bpd this year

ANKARA

The U.S.' crude oil production could decline by 2-3 million barrels per day (bpd) this year, according to the country's energy minister.

The impact of coronavirus on world economies has been "devastating" and its effects on global energy markets have been "dramatic," causing a massive decline in crude oil demand, Dan Brouillette said Friday in his remarks at G20 extraordinary energy ministers meeting.

"We must stabilize world energy markets by putting an end to this dangerous price decline," he said.

Brouillette urged all nations to seriously examine what can be done to correct the supply-demand imbalance in the global oil market, and called for all countries "to use every means at their disposal to help reduce the surplus."

He said the U.S. could open up its strategic petroleum reserves to store as much oil as possible in order to take surplus off the market since commercial oil storages are filling up around the world due to glut of oil supply.

The U.S., which became the world's largest crude producer in November 2018 after surpassing Saudi Arabia and Russia, also estimates a decline in its crude output in 2020, according to Brouillette.

"By the end of this year, U.S. production will see a reduction of nearly 2 million bpd. Some models show even more dramatic figures, for example, up to 3 million bpd," he said.

Led by Saudi Arabia, 13 members of OPEC and 10 oil producing countries of non-OPEC including Russia agreed early Friday to curb their total oil production by 10 million bpd from May 1 to June 30.

Saudi Arabia and Russia failed to reach a production curb agreement on March 6, and ignited a price war to prevent losing market share to the U.S., but crude prices declined to their lowest levels since 2002 due to oversupply and coronavirus-related low oil demand.

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