High expectations: why on 9 September, sharply higher oil prices

High expectations: why 9 September, sharply increased the prices of neftaraka link
9 September 2019, 16:50

Vladimir Agoev
On 9 September the global oil market is trading above $62 per barrel for the first time since early August. Commodity prices are rising in anticipation of one of the main events of the world energy market — the meeting of the monitoring Committee of OPEC+. Investors expect a further decline in production countries — exporters of hydrocarbons. According to experts, the prices reflected the news of the resignation of the Minister of energy of Saudi Arabia Khaled al-Faleh.

  • Reuters
  • © David Mdzinarishvili

Monday, 9 September, world oil prices are steadily growing. The energy commodities Brent went up by almost 0.8% and for the first time since early August, trading above $62 per barrel. This is evidenced by the exchange ICE in London.

The rise in prices takes place in the eve of the meeting of the monitoring Committee of OPEC+. On 12 September in Abu Dhabi participants in the transaction for the freezing of oil production will discuss the results of the execution of the contract and will consider the forecast for 2020. On Monday, September 9, said OPEC Secretary General Mohammed Barkindo on the sidelines of the World petroleum Congress, reports TASS.

In anticipation of the meeting, the markets expect further decrease in the production of raw materials exporting countries of hydrocarbons. Thus, oil prices reflect the positive mood of investors. In an interview with RT said the head of analytical Department AMarkets Artem Deev.

«According to analytical agencies, in the course of the transaction state reduce production ahead of 10-20%, which clearly affects the market. The fact that OPEC and OPEC+ will continue to work on reduction of production volumes, gives an optimistic signal increase in world prices», — said the Deev.

Recall that to balance the global market of energy resources of the member countries of the OPEC agreement+ from 1 January reduce oil production by 1.2 million barrels per day from October 2018.

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According to the agreement involved in the transaction of state of OPEC should cut oil production from 26.75 million to 25.94 million barrels per day. It follows from the last report, in July, the cartel countries exceeded the terms of the agreement and the daily mined 25,57 million barrels.

Note that the transaction OPEC+ is valid until the end of March 2020. However, some of the participants of the Covenant already agreed to an indefinite partnership in the framework of the Treaty. This statement was made by Mohammed Barkindo.

«Ratification is an individual process for each country. But some countries have already passed it. Oman, Iraq, for example, reported that their parliaments have ratified the Charter (on the indefinite cooperation. — RT)», — TASS quoted the Secretary General of OPEC.

According to Artem Deev, news about indefinite contract are further supporting oil prices. So, investors are increasingly confident in the continuation of OPEC policy+ reduction of production.

Royal reshuffle

The rise in oil prices RT interviewed experts also connected with the political changes in Saudi Arabia. After three years as head of the country’s energy Minister left Khaled al-Faleh. New leader appointed the king’s son Prince Abdel Aziz bin Salman al Saud.

Investors reacted positively to the news of the change of Minister and now await further reduce oil production in the Kingdom. As a result, the energy in the world beginning to go up. About this in an interview with RT said the Director of the Academy of management Finance and investment Mr. Dadashov.

«The first energy Minister, became a member of the Royal family. As expected, the son of the monarch will strengthen measures to reduce the quantity of raw materials on the market. Apparently, his predecessor, and in combination, and the chief architect of the deal, OPEC+, has not achieved the desired goals and failed to maintain prices at a high level before going public oil Corporation Saudi Aramco,» explained Dadashev.

Initial public offering (IPO) of Saudi Aramco is scheduled for 2020. Originally, the new company on the stock exchange had become the largest in history. So, in October 2018, the government of Saudi Arabia has estimated the cost to the Corporation of $2 trillion and planned to sell 5% of the securities. However, since a barrel of oil fell by almost $20. According to Arseniy Dadasheva, as a result, the chances of successfully raising funds started to decline.

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As the expert, Abdel-Aziz bin Salman may announce an updated action plan for oil already on September 12 at a meeting in Abu Dhabi. At the same time, the appointment of a new Minister of energy will not affect the politics of Saudi Arabia, against OPEC+. This point of view was expressed by Muhammad Barkindo, told TASS.

Moreover, the resignation of Khaled al-Faleh will not affect the relationship of Riyadh with Moscow. On Monday said the press Secretary of the President of Russia Dmitry Peskov.

«Care of an individual Minister is unlikely to affect the overall political will of Moscow and Riyadh on the continuation and further development of multidimensional partnerships, mutually beneficial relationship. These relationships will continue, including cooperation in international energy markets», — quoted Peskov RIA Novosti.

Price bracket

Support world oil prices and providing a weakening of the trade war the US and China. As explained by Artem Deev, the willingness of Washington and Beijing to negotiate signals to investors about the possibility of the end of the conflict in the near future. As expected, this development will increase the demand for oil will lead to rising prices of raw materials.

The rating of Arseniy Dadasheva in the coming months, the us-China negotiations will greatly affect the cost of hydrocarbons.

Meanwhile, it is the decision of the countries — participants of the transaction OPEC+ will be crucial for quotes. As explained in an interview with RT chief analyst GK TeleTrade Peter Pushkarev, thanks to the performance of the contract in the fall of a barrel of Brent could rise to $65-66.

«All that is now required of the monitoring Committee of the OPEC+ is not to spook the market sentiment. The members shall confirm the fulfillment of the plan to reduce production or even claim willingness even stronger to be pressed down on the volume if needed to stabilize the market,» concluded Pushkarev.

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