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OPEC+ officially agreed to reduce oil production in may-June for 10 million barrels per day
Pixabay.com the Ministers of OPEC+ expect Friday to complete talks on production cuts, to win support from Mexico. “The agreement depends on the consent of Mexico to accept the terms specified in the application”, – stated in the final statement, OPEC
Pixabay.com meanwhile, analysts note that even a reduction of 20 million barrels is not sufficient to hold oil prices as world oil demand declined by 30% (30 million barrels per day)
Pixabay.com
OPEC+ following the talks, released a statement which confirmed namerenue to reduce oil production in may-June for 10 million barrels per day. This is stated in the document, which cites “Interfax”. However, the agreement is not yet ready to join Mexico. Previously the most unyielding were Russia, which is now ready to take on the largest share of the decline.
since July, the adjustment of oil production OPEC+ will be 8 million barrels a day, and the next, until 30 April 2022 6 million barrels per day. Special conditions when it is provided for Saudi Arabia and Russia. So, if Saudi Arabia produces in April 12-12,3 million b/d, compared with the current level of reduction will be 3.5-3.8 million b/d, and in comparison with March to 1.2 million b/d.
Russia produces in April of 11.3 million b/d of oil together with condensate, which is not included in the transaction, and in may will need to produce 8.5 million b/d. According to a source familiar with the situation, in April Russia produced 10.3 million b/d of oil exclusively, and thus, Russia will have to reduce oil production by about 1.8 million b/d. This is the largest percentage reduction among all participants, although a month ago because of the reluctance of Russia to cut production failed to reach agreement.
In the case of the implementation of the agreement Russia and Saudi Arabia will have to produce in may and June to 8.5 million barrels per day. From July to December, Russia and Saudi Arabia will be able to produce of 8.99 million barrels a day, and then 9,495 million barrel per day. The baseline to calculate the adjustments is oil production for October 2018, with the exception of Saudi Arabia and Russia, the base of reference for which will be 11 million barrels per day.
the Decision that was signed today will be valid until 30 April 2022, the possible extension of the agreement will be discussed in December 2021. All these agreements will be in effect with the consent of Mexico. Earlier it was reported that the Minister of energy of Mexico did not agree with these cuts and left the meeting, which lasted 11 hours.
after that the Minister of energy of Mexico rocío Nala said on Twitter that the country may cut oil production at 100 thousand barrels per day (b/d) as part of the OPEC deal+ in the next two months. At the same time, according to sources TASS, the meeting of OPEC+ Mexico proposed to reduce production by 400 thousand b/c. According to the plan, OPEC+ Mexico proposed to reduce the production level of 1.75 million b/d, however, according to the IEA, in the fourth quarter of 2019 North American country has produced 1.95 million b/d of 200 thousand b/d more.
the Ministers of OPEC+ expect Friday to complete talks on production cuts, to win support from Mexico. “The agreement depends on the consent of Mexico to accept the terms specified in the application”, – stated in the final statement, OPEC. Discussion with Mexico proposed conditions planned in the framework of the G20 negotiations, which are scheduled on Friday at 15:00 Moscow time.
At Mexico’s involvement in the deal insists the delegation of Saudi Arabia, reports RIA “Novosti”.
In the communique OPEC+ also call all the major manufacturers, to contribute to efforts to stabilize the market. According to sources “Interfax”, OPEC+ expect other major manufacturers will reduce production by 5 million barrels per day. Compliance will be monitored on the basis of data on oil production based on information from secondary sources, in accordance with the methodology applied to OPEC member countries.
the Next OPEC meeting+ scheduled for 10 June in the webinar format to determine further actions needed to balance the market. OPEC+ is also confirmed and extended the mandate of the Ministerial monitoring Committee (JMMC) and its members.
meanwhile, analysts note that even a reduction of 20 million barrels is insufficient to UDArgania oil prices as world oil demand declined by 30% (30 million barrels per day). And in the US demand for gasoline fell by 48%, to 5.1 million barrels per day for three weeks until April 3rd.
on the other hand, on the eve of the discussion of the impending transaction was marked recovery in oil prices. According to Bloomberg, the cost of the nearest contract for the supply of North sea Brent crude oil rose by more than 10%, to 36.4 per barrel. By 21:00, the price dropped to 32.3 dollars per barrel. The dollar fell below the level of 73 rubles to the dollar. The index of the Moscow exchange added per day 1.2%, while the dollar RTS rose by 3.7%.
