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OPEC+ aftermath US producers cautiously restoring output
The aftermath of the OPEC+ meeting to agree The relative stability of oil prices, with West Texas
oil production cuts beyond the end of June is still Intermediate (WTI) close to $40 per barrel, is
playing out. compelling at least some US producers to start
Having reached agreement, OPEC has now restoring some of the output they have curtailed
moved to ensure that countries match their since March. (See: US oil producers cautiously
promises and has levied additional cuts on restoring curtailed output, page 14)
countries who failed to meet their quotas in Analysts are estimating that up to 500,000
May. bpd of US shale production – around a quar-
High on this list are Iraq, Kazakhstan, Nige- ter of what has been shut in since the downturn
ria and Angola; the first two countries are said started – could return to the market by the end
to have come up with agreed proposals; the of June.
remainder were due to commit by Monday. A “With prices where they are now, if they stay
full report on the outcome of these talks is antic- above $30 [per barrel], I wouldn’t expect any sig-
ipated soon. nificant curtailments from us in Q3 or beyond,”
One country that has moved to respond to Devon Energy’s CEO, David Hager, said at a JP
the effects of the oil price collapse is Saudi Ara- Morgan energy conference last week.
bia, whose oil giant Aramco is planning major However, oil prices of around $40 per barrel
staff cuts and is pulling back on developing are anticipated to continue acting as a brake on
its oil and gas deposits. These moves follow a new drilling, even as some existing production
drastic fall in revenue, which has hit its balance is restored.
sheet, and the pullback marks a rare pause in Continental Resources is also among the
Aramco’s efforts to drill wells, discover fields companies saying that it will start to restore some
and expand known deposits to replace the of its output in response to current crude prices.
barrels being pumped from its conventional The company said it expected to bring back
oil reserves. around 20% of its shut-in production in July.
After last week’s positive talk about Yemen The return of production is not limited to
raising its crude oil production by 25%, matters shale plays. ConocoPhillips – which has both
have come back down to earth with the occu- shale and conventional operations – has also
pation of the island of Socotra by the Southern said it is considering restoring some of its cur-
Transitional Council (STC), which was sup- tailed volumes, which account for about a third
posed to be part of a power-sharing agreement of its production, over the next few months. This
with the government. Small steps of progress are includes a plan to restore 100,000 bpd of shut-in
threatening to unravel. production in Alaska by July.
As US production is being restored, how-
If you’d like to read more about the key events shaping ever, there are warnings that this could com-
the Middle East’s oil and gas sector then please click plicate global efforts, including those by the
here for NewsBase’s MEOG Monitor . OPEC+ group, to stabilise crude prices by
restricting output.™

P8 www. NEWSBASE .com Week 25 25•June•2020