MOSCOW, 1 may. /TASS/ — the countries of the OPEC Alliance+, collectively controlling about 40% of the world oil production may 1, will reduce it by almost 10 million b/d, to avoid a collapse in the oil market.
the unprecedented Volume limits — each country in the agreement, including Russia, within may-Jun “sacrifice” about 20% of production. According to the respondents TASS experts, all participants of the transaction at this time will have to comply fully with the terms of the agreements, because in fact at stake is the question of survival.
the Pandemic has caused the strongest in the history of the decline of energy consumption in the world. According to the International energy Agency (IEA), oil demand in April will fall to 29 million b/d, and average in the second quarter to 23 million b/d.
the Price of Brent crude oil under the pressure of these factors have dropped to $20 per barrel, and according to analysts, could test the level of $10 in the absence of positive news.
the Reason for optimism, investors appeared in mid-April, when Russia and Saudi Arabia finally overcome the phase differences and resumed has spent the years, the mechanism of production cuts within OPEC+. However, their attempt to involve the voluntary decline of the United States, Canada, Brazil and Norway is not entirely successful. To cut production organized in the second half of 2020 agreed to only Norway. USA and Canada are also expected to decline, but it will be rather organic in nature.
According to IEA, the total contribution of oil exporters outside OPEC, at a reduced production may not be more than 2.5 million b/d. Thus, even the common efforts of the major oil producers will not be enough to fully cover the imbalance of supply and demand in the second quarter. However, this was not the goal of the agreements OPEC+, analysts say the energy centre of Moscow school of management SKOLKOVO.
Experts polled by TASS, I agree with this conclusion. “On the normalization of the occupancy level of the storage after the start of the recovery in demand may take from several months to several years”, — said the Director of the division of corporations of the international rating Agency Fitch Dmitry marinchenko.
the Head of the Department for strategies commodity markets Saxo Bank’s OLE Hansen gives for clearing overstocked market at least six months.
In this light, it becomes urgent question of the execution of the agreements, which in former times were able to observe not all OPEC countries+. From 2017, when the work began limiting production OPEC+, for their performance was monitored by a specially created Ministerial monitoring Committee, which will now continue on a monthly basis to report on the implementation of the plan.
And although the overall result for GRUPPE countries is almost always higher than 100%, it is known that this result was achieved primarily due to over-fulfillment of the duties of Saudi Arabia and other middle Eastern countries.
Complaints about the nonfulfillment of the conditions from time to time emerged in Iraq, Nigeria and several African countries. Due to technological and other reasons not always their quota in the agreement were fulfilled and Russia. And given the unprecedented reduction in the new agreement, many observers raised the question about whether the allies fully to ensure the implementation of the agreements in may-June?
Without nuance, of course, will not do, he said. So, Iraq de facto does not control the extraction in Kurdistan, also the discipline of execution can be worse in small countries.
“But the backbone of the manufacturers to adhere to the agreements, it should allow to reach the level of performance of not less than 85-90% in may-June,” expects marinchenko. Similar expectations and Hansen from Saxo Bank. “I have often criticized Russia for their slow response to production cuts, but now we see that Russia real preparing to cut production, they want to fulfill a bargain to the maximum. I think that overall performance will be at a high level,” he said.
“Russian companies are unlikely to deliberately go to the violation of the terms of the transaction, which was de facto agreed with President Putin, the technical ability to reduce production there — can hardly wait some negative surprises. Companies have already begun to lay the reduced level of production in their updated business plans,” marinchenko says.
