Minister of energy Alexander Novak confirmed Russia’s intention to continue to participate in the transaction OPEC+. The Minister noted that due to the production cuts by OPEC members+ and a drop in production in other countries, the excess of oil on the market in may dropped to 7 million barrels per day in June should be a balance of supply and demand, and in July, we can anticipate a shortage of oil.

But until that happens, not in the interests of oil-producing countries once again amplify price volatility negative information. The market was full of expectations, only slipped on fears the postponement of OPEC+ and the quotes again fell below $ 40 per barrel. Did not save even the statistics from the USA showed a decline in reserves of “black gold” in the vaults by 2.08 million barrels, data from China on the restoration of consumption of oil products.

the flames were fanned colleagues on transaction OPEC+. Iraq and Nigeria are not fulfilled in may, the conditions for production cuts. Iraq by more than half, and Nigeria at 48%. In General, the countries of cartel of countries – exporters of oil has reduced production by 75% of the required amount. After this information is put in doubt not only the date of the meeting of OPEC, but also the future transactions. The last assumption, however, is more from the category of fiction.

“OPEC+ can’t afford not to reach agreement. The market price of oil is far from the level required many producers to trim their budgets,” says chief strategist at commodity markets Saxo Bank OLE Hansen. He stressed that even under the most negative scenarios of future negotiating some sort of deal will be reached, but if continued non-compliance, it will not be able to achieve their full potential support prices.

If no panic approach to the failure in may of OPEC agreements+ some parties in the transaction, then there is nothing critical. They don’t even have violated its conditions, because they can reach targets in June. More than 100% of the conditions of the bargain, only Saudi Arabia, UAE and Kuwait. Russia had almost fulfilled its obligations, reducing production by up to 98% of his quota.

So talking about the failure to comply with the terms of the transaction in some countries is possible only in the light of interim results. And for them to transfer or cancel a meeting of OPEC+ makes no sense. Especially if we will focus on the extension of the existing quota reduction. “The postponement of the summit is possible but not very feasible – if the goal is to cut production in July, it is best to do this prior to the conclusion of contracts for this month”, – says Director of group corporate ratings ACRA Basil Tanurkov.

I agree With that, not all experts. According to Hansen, if we fail to find common ground on issues of compliance with the terms of the transaction, it makes sense to reschedule for a later date. This will give OPEC time to assess compliance to production cuts and prospects of a recovery in demand.

Experts agree that the agreement will be extended for no more than 1-2 months. “In the long term, an agreed reduction of redundant, at least in the conditions adopted for the second half of 2021 and the first quarter of 2022,” says Tanurkov. From his point of view, additional cuts now will allow early to reconsider the terms of the transaction in the future.

in addition, stresses Hansen, some producers, including Russia, faced with high demand for its oil in Asia, and Russian companies will be very reluctant to extend the current terms of the transaction. And without the support of Russia, the agreement will fall apart.