Barrel of intrigue: as the latest in 2019, the meeting of OPEC can affect oil anacoreta link
Oil prices December 4, increased by 2% after a sharp decline a day earlier. In the energy market remains uncertain before the last in 2019, the meeting of the OPEC Alliance+. As expected, December 5 exporting countries of hydrocarbons in the Vienna meeting can extend a deal to reduce the extraction of raw materials for the next year. Meanwhile, the intrigue created a growing contradiction between the Contracting parties concerning the volume of production decrease. As the results of the meeting could affect the price of oil at RT.
- © Ryad Kramdi
4 December the price of Brent crude rose 2% to us $62 per barrel. This is evidenced by the exchange ICE in London. Thus even before the quotations were down to $60,3. Price fluctuations of the last days experts associated with the uncertainty of investors to the Ministerial meeting of OPEC and member countries of the OPEC transaction+.
From 5 to 6 December in Vienna, the Ministers of the States — exporters of oil will hold the last meeting in 2019. As expected, the parties will discuss the future of the Treaty on the reduction of production of energy resources.
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Recall, from January 1, 2019, the parties to the agreement OPEC+ reduce oil production by 1.2 million barrels per day from October 2018. The main volume of daily cuts have Russia and Saudi Arabia — 228 and 322 thousand barrels, respectively. The deal is valid till the end of March 2020 and should lead to balancing of demand and supply on the world market.
«The most likely outcome of the Vienna meeting the deal will be extended for at least six months. Now all parties to the agreement is beneficial to continue the cooperation, because thanks to him, oil prices are still quite high,» — said in an interview with RT the head of the Department investiga «BCS» Narek Avakian.
In fact, OPEC+ already recognized the need to continue the production cuts beyond March 2020. This was previously stated by Minister of oil and gas of Oman Mohammed bin Hamad ar-Rumhi. In his opinion, the contract should be extended until the end of 2020. The decision of the countries — exporters of oil will depend partially on the results of the presidential elections in the United States.
A controversial issue
The meeting in Vienna will also consider the possibility to further increase the volumes of reduction of oil production by 400 thousand barrels per day. This was previously reported by TASS with reference to the Minister of oil of Iraq tamer al-Gadban.
The question of reducing the production of raw materials can become a reason for dispute between the countries — exporters of hydrocarbons, said the head of Department of analytical researches of the Higher school of financial management Mikhail Kogan.
«The upcoming summit may be no less difficult than last year, when at some point at stake was the future of the OPEC from-for unwillingness of Iran to go to the symbolic reduction of production in terms of sanctions. Today the intrigue create contradictions between Russia and Saudi Arabia,» — said RT Michael Kogan.
As told by RT the head of the analytical Department AMarkets Artem Deev, the Saudi authorities are increasingly in favour of a reduction in oil production.So the reduction of production should reduce the volume of the global supply of hydrocarbons and to cause an increase in prices for energy sources. According to Deeva, expensive oil need Saudi Arabia for budget execution and the successful IPO of state-owned energy company, Saudi Aramco.
«In anticipation of the placement of shares of Saudi Aramco, the Kingdom most of all interested in the maintenance of relatively high oil prices. To balance the state budget Riyadh required rates in the range of $80-85 per barrel. But members of the Alliance are unlikely to agree on this scenario. The current level of oil prices suit many people, and in the case of more reducing production of the country will begin to lose market share,» explained the analyst.
As previously noted Minister of energy of Russia Alexander Novak, the official position of Moscow about changes in the volume of oil production remains «a mystery.» Meanwhile, in late November Russian oil at a meeting in the Ministry of energy has proposed to retain the existing declining production and to postpone the question of the extension of the deal, OPEC+ until March. About it journalists were told by the Vice-President of LUKOIL Ravil Maganov, reports RIA Novosti.
According to Michael Kogan, in the cold season of the Russian oil companies it becomes more difficult to reduce the production of energy. So if the member countries of OPEC+ still decide to reduce the level of oil production, Russia will be able to take on only a «symbolic amount» of reduction.
A cautious approach
According to analysts, the extension of the deal, OPEC+ and maintaining the current production levels will not lead to sharp changes in world prices of oil. As told by RT, the analyst of «freedom Finance» Alen Sabitov currently a global carbon market remains relatively balanced.
«If we talk about global oil supply, now it is possible to note a slowdown in US production. This allows the OPEC countries not to increase the volume of reductions. Such a decision will help preserve the current balance in the oil market and are unlikely to have a major impact on the prices. So Brent will remain around $60 per barrel,» — said Alen Sabitov.
According to the analyst, if at the December meeting, the parties decide to cut oil production, the share price can grow to $65-70 per barrel. However, the decision of the participants is likely to be deferred until the next meeting, says Artem Deev.
«In December, the country will announce the intention of further reducing the quota, but will not make the final decision and will take the issue to the next meeting. In their desire to raise prices Saudi Arabia recently forced to behave as gently and not to put pressure on the countries in the Alliance. I note that almost a year ago from OPEC+ is already out of Qatar, and next year the organization is leaving Ecuador», — concluded the analyst.