Russia and Saudi Arabia agreed on a new deal for reducing oil production by 20 million barrels per day (20% of the world market). About it reports Reuters referring to the representative of the Russian side in the negotiations and the OPEC representative
muha04 / DepositPhotos meanwhile, 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). And in the US demand for gasoline fell by 48%, to 5.1 million barrels per day for three weeks.eat until 3 April
auriso / DepositPhotos
OPEC Members+ following the talks on Thursday, April 9, agreed that from 1 may until the end of June 2020 a reduction of oil production will be 10 million barrels per day.
according to Reuters, citing a statement by the group, from 1 July the reduction will amount to 8 million barrels per day, and from January 2021 to April 2022 6 million barrels per day.
In accordance with the agreements of the various participants in the transaction have different cut production: Russia and Saudi Arabia of 2.5 million barrels. each Iraq – by 1.06 million barrels., UAE – 0.72 million barrels.
OPEC Members agree to hold a new teleconference on June 10 to discuss the situation on the market.
Initially, the Reuters sources claimed that Russia and Saudi Arabia have agreed on the resolution of the key contradictions that hinder the conclusion of new transactions, and agreed to reduce oil production by 20 million barrels per day (20% of the world market). The newspaper the Wall Street Journal, citing its sources reported that Saudi Arabia agreed to cut production by 4 million barrels a day and Russia by 2 million barrels.
the Source RIA “Novosti” reported that the country wants to reduce oil production by 22%. For Russia and Saudi Arabia, basic level, from which will be calculated the extent of reducing the production is 11.3 million barrels per day. Under these conditions, Moscow and Riyadh will be required to produce not more than 8.8 million barrels per day from may to June 2020.
meanwhile, 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). And in the US demand for gasoline fell by 48%, to 5.1 million barrels per day for three weeks until April 3rd.
All OPEC+ agreed with the terms of the new deal to reduce oil production. But the agreement was excluded Iran, Libya and Venezuela.
Informed the interlocutors of RBC, close to the Russian energy Ministry, said that Russia is ready to reduce production of 1.6 million barrels., or 14% from production levels in the first quarter (11.3 million bbl./day) in case if the transaction will join other major oil-producing countries. Russia’s position was that the reduction should go countries in the first quarter all together produced an average of 70 million bbl./the day – in addition to OPEC and Russia is the United States, Brazil, Norway, Canada, Mexico and others.
the Bloomberg Sources say that the negotiators are still arguing about what kind of mark to count the reduction. Saudi Arabia insisted that production was reduced relative to the current level, while Russia would take it from mining in the first quarter. The difference between these marks is significant. In January-March, before the rupture of a previous transaction OPEC+, Saudi Arabia produced 9.8 million barrels. a day. In April, the Kingdom dramatically increased this figure, bringing it to 12 million barrels. a day. Moscow, however, the level of production after the cancellation of the transaction did not change – it remained at an average of 11.3 million barrels.
Russian President Vladimir Putin said on 3 April that oil production within OPEC+ should be reduced by 10 million barrels per day from the level of the first quarter of 2020 (about 40 million barrels per day). To reduce the production by 10 million also expects the US President Donald trump, says Meduza.
Immediately after the messages about the new deal between Moscow and Riyadh the price of oil began to rise sharply. On the London stock exchange a barrel of Brent at the time broke the mark of 36 dollars.
April 9, OPEC members+ conducted a video conference to discuss the future of the deal to limit oil production. The new deal may be unprecedented. The single largest reduction in the previously agreed OPEC, amounted to 2.2 million barrels per dayand during the financial crisis of 2008.
Sources-OPEC indicated that any deal on major reductions will require the participation of the United States. But Washington still was not ready to participate in the agreement.
According to the Minister of oil of Iran Bijan Zanganeh, OPEC+ discusses two scenarios a reduction of oil production at 10 million b/s and 11m b/s. According to him, these figures do not include the extraction of other countries, such as USA, Brazil and Norway. If the decrease will amount to 10 million b/d, then each country would have to reduce production by 22%. Iran, Venezuela and Libya continue to be excluded from the transaction.
meanwhile, the Bloomberg Agency with reference to representatives of the OPEC countries+ participating Thursday in a video conference about the possibility of reducing oil production, reports that Russia and Saudi Arabia in may-June 2020 may cut production to 8.5 million b/d each. Thus, Russia will have to reduce oil production from March level of 2.8 million b/d, Saudi Arabia, which in April increased production to 12.3 million b/d by 3.8 million b/d.
in addition, previously, the Agency also reported that one of the options, which is discussed at the OPEC conference+ Thursday, is the decline in production in June by 10 million b/d, with the release in December, a decrease of 8 million b/d and by April 2021г 6 million b/d, reports “Interfax”.
In March, the price of Brent crude oil in less than two weeks dropped from $ 50 per barrel to $ 25. This occurred against the background of falling demand because of the epidemic of the coronavirus and the fact that Russia and OPEC+ failed to agree on production cuts. For Russia it’s a disaster, although not want to admit to the Kremlin.
Russian grade Urals in Northwest Europe, 1 April fell to 10.54 per barrel, which was the minimum value since March 1999. The yield of the Urals on March 30 and 31 became negative, the cost of transportation exceeded the cost. 3 April, the price of Urals rose to 14.43 per barrel, coming from the zone of negative yield.
In the course of trading on the currency market, 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%.
the Ruble in the morning sharply jumped: the dollar fell to nearly 73 rubles, but then lost a significant part of the growth. The Euro went below $ 81 ruble.
Russia’s stock market had a 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.
