Saudi Arabia and Kuwait have sanctioned the resumption of oil production at the Wafra field from Sunday, over four years after they halted its output, reported Bloomberg News.
Wafra has been shut since May 2015, due to a dispute over Saudi Arabia’s renewal of Chevron Corp’s concession.
However, both countries have said the resumption would be unlikely to add significant amounts of oil to the market within the current duration of the OPEC production cuts deal, which runs until the end of March.
The International Energy Agency (IEA) has forecast a 435,000 barrel per day (bpd) drop in global oil demand year-on-year for Q1 2020, due to the coronavirus outbreak.
This is the first quarterly drop in demand in more than 10 years. Oil prices have already tumbled around $10 per barrel for Brent crude, down to $55 per barrel, before stabilising at $57 as of writing.
Global supply fell by 800,000 bpd in January to 100.5 million bpd (mbpd).
The blockade in Libya has slashed its production, while the UAE saw a 300,000 bpd drop in its output. Global output was steady, compared to 2019, as the drop in production from OPEC members was offset by a 2.1 mbpd increase in production from non-OPEC members.
Prior to the outbreak, producers were expecting the market to balance in the second half of 2020 in response to OPEC’s production cuts, in place as of January 2020, the expectation of stronger demand, and weaker supply growth from non-OPEC members.
After the outbreak began, OPEC’s joint technical committee suggested further output cuts of 600,000 bpd, bringing the total cuts to 2.3 mbpd, as well as the additional 400,000 bpd that Saudi Arabia has elected to cut.
