US oil production could decline this year from 2 million bpd to 3 million bpd, due to limited storage capacity and low oil prices, Russian Deputy Minister of Energy Pavel Sorokin told media on Wednesday local.
“We see that the drop in production in the United States can range from 2 to 3 mln barrels per day this year either because of the filling of storage capacities, or simply because it is not possible for some companies to work under price conditions at $ 30. 35 [per barrel], not to mention $ 20 [per barrel]”Said Sorokin in an interview with the Roscongress Foundation carried by TASS.
In addition to large production reductions in the United States, cutbacks in Canada could exceed 800,000 bpd, so these two North American producers could supply between 2.8 million and 4 million bpd of producer cuts. not part of the OPEC + pact, said Sorokin.
For the United States, Rystad Energy predicted in mid-April that oil production would drop 1.5 million bpd by the end of 2020. At that time, Wood Mackenzie expected supply 48 lower in the United States or 2.6 million bpd lower than its forecast of collapse before prices for the end of 2021. The drop of 2.6 million bpd until 2021 implies that in response to lower oil prices, operators would cut more than 100 platforms in the Permian basin by the end of May 2020 and more than 200 platforms, or 25%, across all games at the end of June .
Related: Why Russia Finally Accepted Deeper Cuts In Oil Production
In total, low oil prices could force 4 million bpd of non-OPEC supply out of the market, the WoodMac Global Oil Supply team estimated.
According to Russian Deputy Minister of Energy Sorokin, world commercial oil stocks could begin to decline in the third quarter of this year if countries begin to ease the bottlenecks.
Participants in the OPEC + Pact are motivated to cut production because the “penalty” for no action is another market collapse, and no one is interested, said Sorokin.
Referring to Russia’s difficult task of cutting 2 million barrels a day under the OPEC + deal, he said Moscow expects to reach “the maximum level of reduction as soon as possible”.
By Tsvetana Paraskova for Oilprice.com
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