OPEC+ ready on June 6 to extend the agreement to reduce production on the same terms — while preserving the overall quotas to 9.7 million barrels per day — for two months after July 1. In this variant, as reported by “Kommersant”, insisted Saudi Arabia, Russia is ready to go meet her. But the current agreement has revealed a new problem: a number of countries, in particular, Iraq and Nigeria, may not have cut production according to the quota. Given that the largest-ever production cuts was not without difficulty some of the participants in the transaction, this approach can lead to conflict within OPEC+. However, experts believe that a compromise with the offenders will be found.OPEC Ministers+ 6 June will begin negotiations on the renewal after July 1, the transaction on the limitation of oil production. With regard to quotas of the agreement, key members of the Russian Federation and Saudi Arabia will insist on the prolongation of the deal with the current reductions in 9.7 million b/d. the Most likely option, as well as wrote “Kommersant” on 27 may, is an extension of the current quota for two months, although it is possible their extension is only for July.The parties to the agreement have pledged to cut production of 9.7 million b/d in may—June and then gradually to soften the restrictions. However, in may there were suggestions to extend the current hard quota for some time because of the quarantine measures in the world are taken slower than expected.But the situation of the participants was very different. So, Saudi Arabia to balance the budget needs oil price of $70-80 per barrel, and Russia $42 per barrel. Minister of energy of Russia Alexander Novak said on 4 June that in may the excess supply will be reduced to 7 million b/d, and in July it is already possible shortage of 3-5 million b/d depending on the parameters of the deal. Co-owner of LUKOIL Leonid Fedun in an interview with “Kommersant FM” called the idea of extending the current quotas for two months “absolutely the right decision”. On these expectations, the price of Brent crude oil June 5, exceeded $42 per barrel for the first time since the beginning of March.The problem, however, may be that individual members of OPEC+, in particular, Iraq and Nigeria have failed to meet their quotas in may. Deputy Minister of oil resources of Nigeria Folasade Yemi-Esan has promised to increase the reduction from 1.69 to 1.86 million b/d. According to Bloomberg, Saudi Arabia and Russia exert strong pressure on Iraq to not only comply with the quota, but also compensate its violation in may.Baghdad chronically poorly performing OPEC quotas, referring to social instability and so it Seems that Saudi Arabia was able to convince Russia that the date of easing restrictions on mining to be shifted “right”, says Dmitry marinchenko from Fitch, noting that a compromise could be to leave the current restrictions in the late summer. Lagging members (Iraq, Angola and Nigeria, as well as Kazakhstan and Azerbaijan) will probably publicly promised to improve rune quotas, the analyst believes. He stressed that for sustainable recovery of prices should normalize the demand, and it is not clear how quickly this will happen.The market is now extremely sensitive, adds Catherine Grushovenko of energy Centre Moscow school of management SKOLKOVO. “Demand is recovering slowly, it is unclear how it will develop during the pandemic, when a vaccine is developed. Don’t forget about that store because of low prices for oil continue to fill around the world, and rose from extremely low levels APR prices postagepaid shale producer to increase production. All these factors should encourage the coalition members of OPEC to further stabilize the market,” she said.Vasiliy Karpunin from the “BCS” notes that the extension of the terms of the transaction for one month already incorporated in the current price of oil, and therefore, the quotations even in case of preservation of current quotas will not exceed $45 per barrel in the near future.Dmitry Kozlov
