Oil prices dropped after OPEC+ statement

Oil prices fell slightly on Tuesday after OPEC Plus Group members said they had almost fully complied with the terms of their production cut agreement. Due to the coronavirus outbreak, the demand for oil consumption is declining. 

Brent crude dropped by 17 cents, or 0.37%, to $45.20 a barrel. The benchmark was up by 1.3% yesterday. Additionally, WTI crude prices for the September delivery decreased by 19 cents, or 0.44%, to $42.70. WTI was up by 2.1% yesterday.

According to OPEC+, the group’s compliance with the production reduction agreement in July was at about 97%. Oil producers have thus reduced their oil production to an all-time high, as global demand plummeted.

OPEC Plus reduced its output by 9.7 million barrels per day from July and 7.7 million barrels per day from August. Thus is thus an increase of 2 million barrels per day.

The OPEC+ cannot tolerate excessive price reductions. The economies of some of its members are highly dependent on oil revenues, said the group in a statement. However, the US manufacturers are also benefiting from the cuts by OPEC members and its allies. 

The Trump administration has finalized oil drilling in the Alaska Protected Area

On Monday, Trump finalized a plan that would allow drilling for oil and gas in Alaska’s Arctic National Preserve. Thus, before the possible change of power in the United States, Trump began the long-term lease of primary natural and protected areas.

Michael Dunleavy, the governor of Alaska, believes that opening these protected areas for drilling will create jobs and boost the state’s oil-dependent economy. However, democrats, including Joe Biden, and pro-environmental groups, have criticized the move. They claimed that it would seriously damage the unique Arctic ecosystem and indigenous peoples.

Oil and gas drilling is a crucial pillar of Donald Trump’s plan to expand fossil fuel production in the United States. Oil production from Alaska’s protected areas will begin over the next eight years. Drilling in the area will take about 50 years.

Alaska’s 7.7 million-acre protected area is home to a variety of wildlife species. Because of this, it has not been allowed to drill for decades. In recent months, several major US banks have announced that they will not finance oil and gas projects in the Arctic.

Environmental groups have stated that they are pursuing these measures legally.

According to the US Department of Energy, the state currently produces 500,000 barrels of crude oil per day. This is much less than the two million barrels per day produced in 1988.