The Strategist

API: Demand for oil in the world remains strong, but problems after the OPEC+ deal will persist

04/13/2020 - 05:56

Long-term global oil demand remains strong, but problems in the industry will continue after the OPEC + deal to reduce production, said Mike Sommers, director general of the American Petroleum Institute (API).

Barta IV via flickr
Barta IV via flickr
“Forecasts show that long-term demand for oil and natural gas around the world remains strong. In the coming weeks and months, significant problems will remain for our sector and almost everyone else. However, American oil and natural gas, as well as the American workers who produce, transport, service, process and ship them will be crucial to ensure our economic recovery," Sommers wrote in a statement on the organization’s website.

He recalled that before the coronavirus pandemic, daily oil demand was 100 million barrels.

Commenting on the OPEC+ agreement, Sommers noted that it would bring oil production in line with demand for it, which fell due to the pandemic. At the same time, he recalled, in the US market conditions led to the fact that American producers reduced oil production to meet the historical drop in demand.

"This is an important agreement that will help improve stability in the energy markets in the interests of both American energy consumers and producers," said head of the institute.

API is a US national non-governmental organization dedicated to researching all aspects and providing regulatory activities in the oil and gas industry and trade.

After reducing oil production by 9.7 million barrels per day since May 1, OPEC + countries will cut this volume to 7.7 million in the second half of 2020, and then they will be reducing production by 5.8 million barrels per day until the end of April 2022, says the alliance’s message following a video conference on April 12. October 2018 numbers will be the baseline for the reduction in production, with the exception of Russia and Saudi Arabia - it was decided to take an indicator of 11 million barrels per day as the base for them.