OPEC + reached an agreement to cut production by 10 million barrels a day as Russia desired.
On the afternoon of April 9 (Vienna time), members of OPEC and external partners, including Russia and the US, participated in an online meeting in search of a new agreement to stabilize the market. energy has been plummeting due to price wars as well as the impact of the global pandemic.
|Online meeting of OPEC + group|
The meeting ended with an agreement reached including a reduction of 10 million barrels a day in May 2020; by 6.8 million barrels / day from July to the end of 2020; decreased by 6 million barrels a day starting January 2021 and lasted until April 2022, according to Reuters.
The British newspaper added that the final decision is expected to be made on April 10 after Mexico protests their cuts.
This agreement does not depend on countries other than OPEC + restricting production, but only a covenant to stipulate that Russia and Saudi Arabia must limit production. The group also just called for other manufacturers, like the US, to reduce production by about 5 million barrels a day.
Although the amount of production reduction has been achieved, the market did not react too positively.
Bjornar Tonhaugen, an oil market expert at research firm Rystad Energy, commented that the 10 million bpd reduction was a “disappointing development” for many people who were strongly affected by the oversupply situation. Global.
After the meeting, WTI oil decreased by 9.29%, equivalent to 2.33 USD, trading at 22.76 USD / barrel. Earlier, during the session, the price rose to 28.36 USD / barrel due to waiting for positive news from OPEC + meeting.
International standard Brent oil fell by 4.14% at 31.48 USD / barrel, the previous level was as high as 36.40 USD.
Investors have expected Russia – Saudi Arabia to be able to reduce up to 20 million barrels a day because both need high oil prices to ensure budgetary factors.
|Reached OPEC + agreement but oil price still plummeted. Graphics: CNBC|
Helima Croft, head of global commodity research at RBC Bank, said the market was overwhelmed by the 10 million bpd production cut proposed by OPEC +, probably because of early expectations. about they will reduce 20 million barrels a day. Even so, Ms. Helima Croft said that this is a positive signal in the immediate future and the oil manufacturers need to do more in ending the war.
Prior to the meeting, US Energy Secretary Dan Brouillette said he expected OPEC + would undoubtedly fall by over 10 million barrels a day.
“I think they can easily reach 10 million barrels a day, even higher and certainly higher, including the participation of other countries producing oil like Canada and Brazil … They are very easy to do, “- Mr. Brouillette added.
OPEC Secretary-General Mohammad Barkindo said the COVID-19 translation was an “invisible animal” that was affecting everything in its path. For the oil market, it has completely ended the fundamentals of supply and demand since OPEC + held its March 6 meeting.
However, Mr. Barkindo did not mention that OPEC members have followed Saudi Arabia to conduct increasing exploitation.
Oil prices may still be stable after the meeting of the group of 20 major economies G20. The G20 energy ministers will convene for an extraordinary meeting on April 10, in which Energy Minister Dan Brouillette will attend.
President G-20 on April 7 stated that the meeting will be held to promote global dialogue and cooperation to ensure a stable energy market and allow a stronger global economy.
In a statement almost certain, Moscow previously said it expected OPEC + to reach an agreement to reduce production by about 10 million barrels a day, even 15 million barrels a day. The Russian side is committed to implementing them but needs the participation of the entire US. Cutting production requires government intervention, not small losses from companies following market signals.