The United Arab Emirates plans to reduce its oil output by an additional 100,000 bbl/d in June 2020, on top of its commitments under the OPEC+ deal. Meanwhile, Iraq will curb its crude production by 700,000 bbl/d, a third less than required under the OPEC+ agreement, as oil majors, such as BP, Exxon Mobil, Eni and Lukoil, who are developing Iraq’s giant southern oilfields, refused to accept deeper reductions. The Iraqi government had to agree with limited cuts (300,000 bbl/d reduction) to avoid paying for the reduced output. Foreign oil companies operate under services contracts in Iraq and are paid a fixed dollar fee for their output, in addition to crude cargoes. Consequently, Iraq will have to reduce production in fields operated alone by 400,000 bbl/d to reach a 700,000 bbl/d production cut.
Under the OPEC+ agreement of April 2020, voluntary producers agreed to cut their overall crude oil production by 9.7 mb/d over the 1 May 2020 - 30 June 2020 period, in an attempt to reduce the global oversupply and to firm up depressed oil prices. The production cuts would be calculated on the basis of the October 2018 production level, except for Saudi Arabia and Russia that have a baseline level of 11 mb/d. Production cuts would then be relaxed to 7.7 mb/d from 1 July 2020 to 31 December 2020 and to 5.8 mb/d from 1 January 2021 to 30 April 2022. The potential extension of the agreement beyond April 2022 will be reviewed in December 2021.
Earlier in May 2020, Saudi Arabia and Kuwait committed to further reduce their crude oil production in June 2020, on top of the reduction already agreed with the OPEC+ in April 2020. Saudi Arabia, which had to cut its output by 23% from a baseline level of 11 mb/d to nearly 8.5 mb/d in May-June 2020, will reduce its production by another 1 mb/d and should produce up to 7.5 mb/d in June 2020. Kuwait has also decided to reduce its crude oil production by another 80,000 bbl/d in June 2020. Under the April 2020 agreement, Kuwait agreed to reduce its output by 646,000 bbl/d, from 2.9 mb/d to 2.25 mb/d.