Oil the truce between Russia and Saudi Arabia concluded after a short but devastating price war in March, again hung in the air. This opinion was expressed by the “Rosbalt” the head of IAC “Alpari” Alexander Razuvaev.
According to him, “two weeks before the June OPEC talks+, which will decide the fate of the deal to reduce oil production, Moscow and Riyadh again diametrically diverged position.” “Russia is firmly determined to begin to increase oil production from July, as stipulated in the April agreement,” reads the report of the expert.
He recalled that, in accordance with the 12th April agreements “from may to July, OPEC+ is supposed to cut production by nearly 9.7 million barrels per day”. “Then the plan was supposed to reduce the amount of the reduction in production to 8 million barrels per day before the end of 2020 and to 6 million barrels per day until may 2021. Russia under the deal, planned to increase production by 500 thousand barrels a day since July and as of January,” — said Razuvaev.
However, he says, “other partners in OPEC+ suggest not to increase the supply of two months, extending the maximum possible quota before September.” “The Saudis have cut production by 1.3 million barrels per day in the transaction and a further 1 million bpd under pressure from Washington, and still be unsatisfied with the current level of oil prices. They are forced to raise taxes and cut social spending. In their favor, and said the economy is the oil sector. The world economy is still oversupply of raw materials. Production exceeds demand by 7-12 million barrels per day,” notes the analyst.
Negotiations OPEC+ will start on 5 June with meetings of the technical monitoring Committee of the OPEC+ (JTC), which provides advice and expert support to the Ministerial Committee OPEC+. June 8 will be a meeting of the Ministerial monitoring Committee (JMMC). June 9, to meet OPEC Ministers, and on 10 June the Ministers of OPEC+.
meanwhile, the expert believes, “the final decision on Russia’s position, as always, will take it personally (Russian President Vladimir) Putin.”
warns Razuvaev, “if the parties do not agree, then in June the price of “black gold” again to collapse that will shock the Russian budget and, of course, the ruble, the dollar/ruble may reach 80 rubles to the dollar.”
“however, the global economy will emerge from quarantine and the soft policy of world Central Banks should support oil prices. We continue to orientirueshsya $50 for Brent by the end of 2020,” concludes the analyst.
we also Add that since the beginning of this year on the global oil market rode several waves of falling prices for “black gold”. The negative situation caused by a whole complex of factors: a General overproduction of raw materials, a sharp drop in demand due to the rapid spread of coronavirus infection COVID-19 (March 11, was declared a pandemic) and concerns about its impact on the global economy and the collapse of the deal, OPEC+ (officially from April 1, but in fact, after fruitless negotiations of the countries-oil producers at a meeting on March 6 in Vienna). Just last circumstance was the trigger to the collapse in oil prices. Moreover, Saudi Arabia announced plans to increase production and lower oil prices. Later, the desire to lower the prices declared Iraq, Kuwait, UAE and Nigeria.
For the first quarter of 2020, the price of Brent crude fell by 65.6%, while WTI rose by 66.5%. And at the end of March the cost of June futures on Brent fell below $22 per barrel (to $of 21.72), that is, to at least March 2002, and the may futures for WTI to us $20.1.
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