the Monitoring Committee of the OPEC Alliance+, which includes the countries-participants of the transaction on the limitation of oil production, reported on the performance of the contract in may. The results were disappointing: none of the members of the Alliance has not fulfilled its obligations. Both small and large producers, including Saudi Arabia and Russia, cut their power much more slowly than promised. The price of “black gold” in such circumstances, fall not satisfied with any of the energy producers. If the oil powers will continue to limit its production of the appetite only in words, the value of “barrels”, as it already happened in April of this year, back down to zero.
Until recently, meetings of the monitoring Committee of OPEC+ held twice a year — before the traditional summits of the Alliance, which was attended not only by direct participants in the cartel, but also the independent producers of “black gold”. But since April this year, when representatives of the oil Alliance after much debate, agreed to extend the period of restriction of production to 9.7 million barrels by the end of July, meeting at the level of the control Committee, the oilers decided to hold monthly to check: who of the delegates comply with the terms of the transaction, and who skimp on their obligations.
it Turned out that almost all the signatory countries do not keep their word. According to the OPEC report, published on the eve of the meeting of the monitoring Committee, the main violators of the terms of the deal were Iraq and Nigeria, which cut the prey only half of the promised restrictions. As a result, according to the Minister of energy of Russia Alexander Novak, the agreement was made only 89%, and the surplus of oil on the world market rose by another 1.1 million barrels per day. It should be noted that the major producers of “black gold” reacted to his promises is also not too responsible — Saudi Arabia and Russia reduced their production to only 94-96% of the quotas. Is it any wonder that the prices of a barrel of another week and a half ago confidently overcome a mark in $40, started to decline again to $36-37.
the Next meeting of the energy Ministers of the OPEC countries+ where can be made the decision on the extension or lifting of the restrictive limits on the extraction of raw materials, scheduled for December 1, however, the monitoring Committee of the Alliance will meet on a monthly basis. “We will watch how the situation develops, how the balance of supply and demand in the market,” notes Novak, stressing that the agreement “flexible”, so the question of the extension of the restrictions for August is still open.
According to Analytics “freedom Finance” Evgeny Mironyuk, despite the gradual recovery of demand and a record juice��of Amenia supplies which help to balance the market, in 2020 the world economy will not be able to cope with the excess oil. The lack of discipline among the parties to the agreement OPEC+ is an additional factor that does not allow manufacturers to achieve the required price level. Such positive aspects as the production decline in Venezuela almost 55 thousand barrels per day, will not be able to neutralize the production ambitions of the other players in the market, the increase in exports which 300 thousand “barrels” threatens the stability of oil prices”, — says the analyst.
“the realism of the implementation of the agreement OPEC+ often does not stand the test of time because many parties violated the agreement immediately after the negotiations,” warns Director of the energy development Fund Sergey Pikin. As noted in the report, if in the first half of 2020 world oil demand fell by almost 12 million barrels per day, in the II half interest in the “black gold” will decrease by 6.5 million “barrels”. In order to remove from the market such large volumes of raw materials will require new negotiations, the next round of which according to the plans of representatives of the Alliance should occur only at the end of the year.
“the Latest decision of OPEC+ supported the stability of the oil market only for a month. There are suspicions that the market situation was out of control of the Alliance, the participants who need to take more determined action to deal with the price situation,” — says head of research Department AMarkets Artem Deev. — Apparently, the temporary effect from the extractive limitations under the expanded Alliance is not working. Oil prices continue to be determined by the momentary circumstances. Including predictions about the second round of the coronavirus pandemic, which will lead to even more glut in the commodity market. It is obvious that the current format of the Alliance OPEC+ is no longer able to effectively regulate the quotations of “black gold”, so before the end of summer is not possible to drop the cost of raw materials. It is possible that under a separate trading session the quotations, as we have already observed this year, will fall to zero”.
How OPEC countries+ performed the transaction on the reduction of oil production (as % of the claimed amount may 2020):
Azerbaijan 98
Saudi Arabia 96
Russia 94-96
UAE 93
Angola 75
Kazakhstan 74
Algeria 73
Kuwait 72
Iraq 43
Nigeria 34
other OPEC countries 60
According to Bloomberg.
