The oil-producing countries of OPEC and the states that have joined the current agreement to reduce oil production, including Russia, decide whether to extend the agreement for the next half year. The ministers of the countries of the cartel and OPEC + will make their verdict at the end of June, but for now they are going to “check the clock” at a meeting of the monitoring committee in Saudi Arabia.
It became known that the parties to the agreement significantly exceeded the plan to reduce production from the beginning of the year. Oil quotes reacted with an increase: in four months the Brent mark went up from $ 51 to $ 75 per barrel. This effectiveness of the transaction makes the participants seriously think about extending the agreement.
On the eve of the meeting, the Minister of Energy of Saudi Arabia, Khalid Al-Falih, said that OPEC will act based on the needs of the oil market. His colleague from the UAE, Suheil Al-Mazrui, in turn, believes that the reduction deal will have to be extended to rebalance the market, because the commercial reserves of “black gold” in the world continue to grow.
Azerbaijan’s Energy Minister, Parviz Shahbazov, stated that the agreement should continue to exist after June, since the cooperation has proved its viability, and the results are obvious. Nigeria hopes to extend the deal. Russia took a wait-and-see attitude: according to Energy Minister Alexander Novak, it is still too early to talk about this.
Since the United States does not participate in the negotiations and stands alone, this does not allow the extended OPEC group to fully control the market. This lack of a deal, which casts doubt on the reasonability of its existence, is noted by many experts. Nevertheless, the agreement has every chance of renewal.
Vadim Iosub, a senior analyst at the Alpari Information and Analytical Center, believes that its growth in oil prices is not only due to the implementation of the plan within OPEC +. “The anti-Iranian oil embargo played its role, as well as the US secondary sanctions, that is, a ban on third countries to buy oil in Iran. In addition, from January to April, for natural reasons, global demand grew, and the last driver was a reduction in oil supply in Venezuela due to sanctions and in Libya due to an internal military conflict, ”the expert notes.
All this is in the hands of American oil industry workers: the stronger the price of oil rises, the more shale oil producers will become more active (it pays off only at high world prices), the analyst adds. “They increase the supply, so the surplus of“ black gold ”temporarily missing from the market, while maintaining prices above $ 70 per barrel, comes back within a few months,” he says.
Thus, all the efforts of OPEC + are in vain. According to the cartel’s forecast, in 2019 the world demand for oil will increase by 1.24 million barrels per day with a supply of 2.18 million barrels. The excess will be almost a million barrels.
So far, Saudi Arabia, Russia, and the “company” have priority over high oil prices, not fighting American rivals. In the holiday season, the Russians are also profitable: the ruble is pegged to the expensive oil, which now stands at $ 64–65. According to analysts, if OPEC will receive hints of a waiver of the agreement, “wooden” will immediately respond to a fall to 66 rubles per dollar.