OPEC and its allies to address the crisis on the oil market

L’OPEP et ses alliés se penchent sur la crise du marché pétrolier

Photo: Gregory Bull Associated Press
The main challenge will be to avoid the fiasco of the previous meeting, which was led not only by a lack of agreement but by a price war launched by saudi Arabia.

The Organization of the petroleum exporting countries (OPEC) and Russia want to resume their discussions to consider a replica of magnitude in the doldrums, the market of black gold, leaded by the pandemic and a price war, but a meeting scheduled on Monday will probably be shifted a few days.

This exceptional meeting by video conference should provide an opportunity to discuss a massive reduction of the production, to the tune of 10 million barrels per day (mbd), a volume (referred to by Vladimir Putin on Friday.

The framework and the purpose of the negotiations seem, however, to always Polish and it is “likely” that the appointment originally set Monday ” will take place later in the week “, indicated to the AFP a source close to OPEC under the guise of anonymity.

A pass weapons between Saudi Arabia, leader of OPEC, and Russia, non-member of the cartel, has preceded the probable adjournment, the two countries accusing each other of having failed in a spectacular manner their previous discussions, there has a month.

The two countries seem, however, to want to re-cooperate. The Russian president said on Friday that it was ” necessary to unite the efforts to balance the market and reduce the production “.

An agreement “would re-balance the deficit of the demand, bring prices back to levels that are more cost-effective and to avoid production stops,” pointed out Per Magnus Nysveen, analyst, Rystad, who describes a real ” poker game “.

The sticking point is mainly ” the amount that each producer will be willing to take for him “, he added.

Shadow american

The figure of 10 mbd is colossal since it alone represents roughly the production Russian or saudi arabian, respectively 10.7 mbd to 9.8 mbd in the month of February, according to the latest monthly report from OPEC.

This figure appeared for the first time Thursday in a tweet from the us president.

Taking by surprise the markets, who immediately jumped to his reading, Donald Trump said, “hope and expect” that Riyadh and Moscow to reduce their production of approximately ten million barrels, and possibly much more “.

This output is made at the time when the tenant of the White House has promised to defend the sector, u.s. oil, the world’s largest producer with 13 mbd, but oil shale has a high cost and is not profitable at current prices.

The shadow of Washington hangs over the discussions to come, Riyadh has warned that they would be held ” at the request of the president of the United States Donald Trump “, according to the official news agency of saudi arabia SPA.

According to a source in Russian as cited by TASS agency, the regulator of the us, has even been invited to take part in the meeting. Vladimir Putin has declared to be ready ” to cooperate with the United States “.

Avoid the fiasco

The main challenge for the cartel and its allies will be to avoid the fiasco of the previous meeting, which was led not only by a lack of agreement but by a price war launched by saudi Arabia.

The price of crude, already roughed up by a request to the point of death, as the strict policies of containment of populations is généralisaient around the world in response to the pandemic COVID-19, had then plunged up to meet on Monday to levels not seen since 2002.

The two reference price, that of a barrel of Brent, the european and that of WTI in the u.s., have completed by early this year the worst quarter in their history, with the price divided by three over the period.

The prospect of an easing in the price war and production finally halted in a joint way, even if she certainly was not able to respond to the deficit spectrum of the demand for black gold, however, has Thursday and Friday to the course to resume.

But beware of false hopes, warns Chris Beauchamp, analyst at IG : “the chances of reaching an agreement seem to be quite weak” and the market ” is preparing for a painful disappointment, which could see the gains of the last 48 hours quickly erased.

Share Button

Add a Comment

Your email address will not be published. Required fields are marked *