Saudi Arabia :Over the pandemic the demand for fuel has crushed and the productions cuts will be frequent to drain out the surplus fuel in global market. Oil prices raise in futures market on Tuesday morning as Saudi Arabia intends to cut down production as well as supply due to negligent demand all over the world.
Brent crude futures has shown a hike in prices to $30.11 a barrel from $21 and were up by 0.9 per cent, despite the losses faced by oil prices, it recovered from those sessions.
Saudi Arabia stated that once relaxations are imposed, it will cut production by 1 million barrels per day in June, reducing about 40% down from April. And sticking to 7.5 million barrels per day for some time to curb the excess of supply over demand which will eventually result in increase of prices.
The curbing of production has overwhelming benefits for the public and encouraging other OPEC members to support and offer for additional cuts which would equalize the global oil markets as quickly as possible. OPEC holds additional and intriguing value as it is a group inclusive of members of the Organisation of the Petroleum Exporting Countries also involving Russia.
Not only Saudi Arabia, but United Arab Emirates and Kuwait is also willing to reduce the production of oil on consistent basis and about 180000 barrels per day altogether. The reduction in production of oil and relaxation measures in biggest economies would lead to a steady and gradual recovery in fuel demand and are expected to ease some pressure on the crude storage capacity as the excess supply was not covered with optimum demand.
Majority of traders are of the opinion that stock will increase at a slower pace and will build keeping the oil prices to neutral and not so volatile. There are countries where the fear of second wave of COVID-19 cases can appear and will result in lock-down, keeping halt at the recovery of demand. As a scarce resource, it cannot be wasted and thus have to be utilised optimally.