under the deal, OPEC+ with Aug oil its members should increase by two million barrels per day. Thus, the volume reduction will be reduced from 9.7 million barrels a day to 7.7 million At the beginning of July the Russian Minister of energy Alexander Novak said that while no decisions about changing the parameters of the transaction. But since then, oil prices were unable to exceed $ 44 per barrel. Although the price of Russian Urals oil for nearly two months is at the level close to the cut-off price in the Russian budget rule (42.4 per dollar), to ensure its preservation in case of production growth is hardly possible.
“the Decision to increase production since August may slow down the growth of quotations of oil at the moment even lead to a level below 40 dollars per barrel of Brent,” – said Director of corporate ratings ACRA Basil Tanurkov.
Another negative factor for Russia if conditions of the reduction will be weakened, may be that the capacity of production in Russia due to technical reasons will be slower than in the countries of the Persian Gulf. The high price of Urals was largely due to the shortage of sour crude oil on the market. In this segment, Saudi Arabia and other OPEC countries will Russia be able to occupy this niche in the market, and will lead to a drop in oil prices with these characteristics. After the failure of quotations to $ 20 per barrel in March – April of the next reduction of prices for Russian oil, albeit minor, can be painful for the budget.
Also, there remains the risk of a return to severe restrictions because of the second wave of the epidemic of the coronavirus, which will cause another reduction in oil consumption. In addition, despite the gradual recovery of demand, the oil storage is not yet empty. “Crude oil inventories in the US remain close to a record high, and the market now fears that outbreaks of coronavirus in Texas, California and Florida – three States with the largest fuel consumption – can slow recovery in demand”, – said head of Saxo Bank strategies in the commodities market OLE Hansen. The expert also stressed that it is highly unpleasant for OPEC was the news that torn by civil war Libya plans to resume oil exports. In recent months there’s almost nothing was produced, compared to 1.1 million barrels per day last December.
“the Current price levels provide a relatively stable supply of oil and at the same time support the world economy in the conditions of a pandemic – the prices are not too high,” says Director of audit services, Deloitte CIS Alexander Gubarev. The expert believes that the reduction of quotas may cause a price adjustment and this has a negative impact on the stability of the oil market than in exporting countries n�� interested.
the Largest oil producer within OPEC – Saudi Arabia, whose budget is more than half dependent on exports of “black gold”, the current level of quotations is not satisfied much more than Russia. But the strength of the Kingdom will be enough to go on increasing production and a temporary reduction in prices, and thus push up the head with the quotes above 35-40 dollars per barrel, the shale industry in the United States.
Most experts still tend to believe that OPEC members+ will not extend the maximum terms of the agreement in August. “Cost reduction of production for OPEC members+ painful, and in the face of growing demand and rising prices would be difficult to convince all the parties to the agreement to make additional production cuts,” says Tanurkov. From his point of view, in the medium term due to the continuing shortage in the market can be expected to continue the trend of the recovery of oil quotations.
According to Hansen, the most likely scenario is an increase in the production since August, the OPEC countries+ by two million barrels per day. Thus most likely in the third quarter of 2020, the price of Brent crude will continue to fluctuate in the range between 35 and 45 dollars per barrel, he said.
