Any optimism generated by the recent OPEC+ deal is fading in the face of an unprecedented demand shock. The OPEC+ group agreed to cut 9.7 million barrels per day from October 2018 levels in May and June (aside from Saudi Arabia and Russia, who will implement cuts from a baseline of 11 million barrels per day). Beyond that headline figure, Saudi Arabia, the United Arab Emirates, and Kuwait aim to cut an additional 2.5 million barrels per day. The International Energy Agency (IEA) estimates that non-OPEC supply could also drop by 3.5 million barrels per day in the coming months. The math is fuzzy, and oil ministers and heads of state have conflated the deal with voluntary pledges by some states and market-driven curtailments outside the OPEC countries. Compliance could also be a challenge, with many questions about whether Russia can deliver its planned cut of 2.5 million barrels per day.
