Although an agreement in principle to reduce the production of the sides managed to achieve, it remains unknown from what time will be reduced. Moscow insists on limiting capacity compared to the first quarter, and Riyadh I am sure that it should be counted from 1 April.
it is Obvious that Saudi Arabia seeks to minimize their own losses from a reduction in capacity. The fact that in the first quarter, as was stipulated in the previous agreement OPEC+, the Saudis produced 9.8 million “barrels” daily. After the cancellation of the transaction in April, they increased their production to 12 million barrels. Agreeing to cut it to 3 million “barrels” of what was discussed on the eve of talks, Riyadh lost much less Russia, which has maintained daily production unchanged at 11.3 million barrels and were willing to limit it by a further 1.6 million
According to the WSJ, this time, perhaps Saudi Arabia to accept a cut in production to 4 million “barrels”. Its total production is less than Saudi Riya originally expected, but still higher than in the first quarter. Russia, as explained sources of the American newspaper, ready to remove from the market 2 million barrels.
Such agreements, as experts believe, will be a major breakthrough in the relations of the two major oil-producing countries. As stated by the head of OPEC, Mohammed Barkindo at the conference on 9 April, in 2020 the demand for “black gold” because of the pandemic coronavirus will fall to 6.8 million barrels per day, while in the second quarter, a decrease will reach 12 million barrels and above. “These are amazing figures, unprecedented for our time”, — said the head of the cartel. According to him, countries outside OPEC+, diminished production by 1.5 million barrels a day, which will still be insufficient to compensate for the falling consumption of raw materials.
According to head of analytical Department Amarkets Artem Deev, that market participants, after the collapse of a previous transaction on March 6, so soon gathered for new negotiations suggests that they are well aware of the consequences conflict. Quotations of “black gold” fell two times and at some point a barrel of Brent crude cost less than $ 20. “These prices are not favorable for all oil producing countries, because the cost of production and transportation “eat” almost all profit and it comes to a situation where raw materials have to sell at negative prices. For the lack of the deficit of the Russian budget need a price above $42.4 per barrel, and the rest will be updated from the national welfare Fund. Saudi Arabia needs the price even higher, so we can hope that the negotiators will eventually find a compromise solution”, — the expert believes.
All will depend on which countries will agree on reducing. If the United States would join the agreement, the oil could return to $40 and above. However, to say how long this price is very difficult. “An important issue will be the situation with the coronavirus, and how the country will really implement the agreement. The lack of agreement will lead to a rollback of a barrel to $20-25, and the cost will be maintained in the long term,” — said the head of the Luxembourg office of the consulting group KRK Group Nikita Ryabinin.
“the Positive decision of OPEC+ will not be able to raise oil prices above $40, but it may fix the price at least at this level that satisfied all parties involved. To raise the cost above can only demand growth in the world economy, and this, in turn, it is impossible to complete victory over the coronavirus. I think that the real demand will start to rise slowly in June and July, but still not enough to allow the barrel to grow to $50,” — said the Creator of the club venture investors ITLEADERS Egor Globenko.
the Final decision on the reduction of production of “black gold” and the question of who will join the new Memorandum, will be decided on 10 April during the meeting of the G20 countries, which as of today’s meeting will be held in format of teleconference.
see also: OPEC+ will identify withthe fate of modern Russia: the failure will be a disaster
