Oil price higher amid scepticism over production deal between Opec and Russia
The oil price rose just 0.46 per cent yesterday after Opec and Russia agreed the largest-ever production cuts.
Supply has been slashed by more than 9m barrels per day – around 10 per cent of the total – after the oil price collapsed to $22.76 as global economic activity stalled.
But the price failed to move significantly as the cut paled in comparison to the 25m-barrels-per-day drop in demand.
Production cut: Supply of oil has been slashed by more than 9m barrels per day – around 10 per cent of the total – after the oil price collapsed to $22.76 as global economic activity stalled
Amrita Sen, founder of analysis firm Energy Aspects, said: ‘The headline cut is very big but this is a drop in the ocean compared to the fall in demand.’
Donald Trump brokered the deal, which marks a truce in the oil price war between Saudi Arabia and Russia, who are wrestling for a greater market share.
The US President later claimed that Opec is looking to cut 20m barrels a day.
Daily demand has fallen by between 25 per cent and 35 per cent.
The world was consuming around 100m barrels of oil per day before the coronavirus crisis – meaning the cuts are not likely to be enough to solve the over-supply problem alone.