Russia may be over tightening of the transaction OPEC+
At the upcoming June meeting of OPEC+ Russia can support the deepening of the limits of oil production. It was assumed that the July quota total quota reduction by OPEC+ will decrease from 9.7 to 8 million barrels a day, but now in Russia we are discussing the option of extending the current quotas for another two months. In the case of maintaining the current quota of oil production in Russia for two months will fall by another 4 million tons, as a result, in 2020, the decline in production is 50 million tons of oil. According to interlocutors “Kommersant”, the option to extend the best quotas of Saudi Arabia, whose budget suffered most from the decline in oil prices.
Russia can maintain the current level of reduction of oil production under OPEC deals+ up to September 2020, said three sources of “Kommersant” in the oil industry. This topic was discussed at the meeting, energy Minister Alexander Novak with the heads of oil companies on may 26, the corresponding position may be made during the upcoming meeting of OPEC members+ in June.
According to the April agreements, from may to July, OPEC+ is supposed to cut production by almost 9.7 million b/d. Then the plan was supposed to reduce the amount of the reduction in production to 8 million b/d before the end of 2020 and to 6 million b/d until may 2021-th. However, instead of easing of the Russian Federation can go on the deepening of the agreement.
under the current deal, the Russian oil companies Russia needs to reduce production in may and June to 8.5 million b/C. Already in the first week of may, oil production dropped to 8.7 million b/d.
Now the Kingdom reduces public spending on major projects, and the most optimal oil price is $80 per barrel. In may, the Saudis, together with their allies the UAE and Kuwait — volunteered for additional production cuts beyond the obligations of OPEC+ 1.18 million b/d. “b” had already suggested that in return Russia will require new concessions.
According to Alexander Novak, the market has gone about 14-15 million b/c the deal OPEC+, and also decline in other countries. While the surplus is about 7-12 million b/d, but the energy Ministry expects that in June and July, the market will find its equilibrium due to the growth of consumption.
“When you weigh still, what influences you more — OPEC+, I think, in General, have lost the meaning that we give it. Other factors: political factors and sanctions, this factor of coronavirus, the state of the consumer market, the stagnation of the economy. But is it dramatic? Dramatic is not”, — in March, said the head of “Rosneft” Igor Sechin. The oil companies and the energy Ministry has not responded to “Kommersant”.
Now the market gradually began to balance, with the gradual lifting of restrictive measures began to recover SPROS, says Daria Kozlova from Vygon Consulting. On the supply side, oil production in the US has already declined by 1.5 million b/d, OPEC members+ to meet their commitments. But, according to her, the risks of continue remain high: “Storage continues to fill up, and how the situation will develop with the pandemic after the release from quarantine is difficult to predict, but even more significant decline in production for Russia is a sensitive time, as there are risks for field development”.
estimates of Mrs. Gantry, in the case of an extension of the current quota to of September, Russia additionally has to remove from the market about 4 million tons of production annually. Thus, in the case of extending the current quota of oil production in Russia is expected to fall this year to 50 million tons.
Dmitry Kozlov
