Despite pessimistic predictions that OPEC could agree to reduce oil production. Presumably, the bulk of the production decrease should take over Saudi Arabia, but finally it will be solved only at the end of November at an official meeting of OPEC. Experts believe that negotiations are conducted only to maintain oil prices. And it worked — on the news of the agreement, the barrel has risen more than 5%.
OPEC’s informal meeting in the framework of the International energy forum in Algeria failed to agree on limiting crude oil production. The agreements should enter into force in November.
We are talking about the freezing of the production level of the countries of cartel on the level of 32.5 million barrels a day while OPEC quota is only 30 million barrels).
According to the organization, in August, OPEC produced 33,23 million barrels. Thus, we are talking about the scenario of Algeria, who had earlier proposed to reduce the total production of OPEC countries at 796 thousand barrels per day. By the way, Algeria is one of the most interested in the freezing of mining countries, as there is reduced production due to the depletion of deposits.
A major role, according to the proposal of Algeria should play Saudi Arabia: it will have to cut production by 442 thousand barrels to 10.1 million barrels, reported Wednesday by Bloomberg, citing a draft agreement.
Nigeria and Libya, according to the plan of Algeria, proposed to exempt from the reduction. But Iran offered to allow even a few to increase production to 3.7 million barrels per day, which is 52 thousand barrels higher than the Islamic Republic was mined in August.
It is because of Iran’s position snapped last attempt at agreement on freezing. Iran from the beginning said that it supported initiatives to stabilise the market, but on the final negotiations in Doha, Qatar, the 17th of April, the Iranian delegation has not arrived. Iran stated that it did not intend to limit myself until you come to the pre-sanctions amounts. After Iran refused to freeze the production and Saudi Arabia.
But the specific amount by which each OPEC member will reduce its production will be determined only at a meeting of the cartel in November, reports Reuters, citing two sources familiar with the negotiations in Algeria.
In the near future should be created a working group that to the 170 th meeting of OPEC, scheduled for November 30, submit a plan for reductions in each country. And after the OPEC countries will actually reduce production will begin negotiations with other producing countries outside the organization.
First of all we are talking about Russia, which is in the informal OPEC meeting not only did not participate, but did not even present as an observer. The Russian delegation left the Algerian forum even before negotiations began countries of the cartel. Earlier Bloomberg, citing sources reported that Russia intends to discuss a freeze only after the OPEC members agree with each other.
The partner of company Rusenergy Michael Krutikhin believes that at this time, further conversations business will not go.
“The message on the conclusion of an agreement — a temporary trick, a verbal intervention designed to support market — said the expert. In any case, until November one to cut production will not happen, but not likely to happen in November.”
On news of the results of the negotiations in Algeria oil added 5.2%, and to 22: 00 MSK barrel of Brent on the Intercontinental exchange (ICE) in London was worth us $48.5. Incidentally, the failure of the April negotiations in Doha to the fall in prices has not led, on the contrary, they started to grow (from about $43 in mid-April a barrel by the end of the month rose to us $48.5).
The head of analytical Department of national energy security Fund Alexander Pasechnik believes that at the meeting on 30 November, the farmers can finally agree on production cuts. Last but not least this happens due to the fact that by that time Iran will come to pre-sanctions levels of oil production.
However, remains the risk that someone will be unhappy with the terms of the production cuts and the conclusion of a final agreement once again fail. And it can once again be Iran and Saudi Arabia. As reported on Tuesday, RIA “Novosti” with reference to a senior source in the Algerian delegation, the Saudis are willing to cut production only under the condition that Iran would limit its production level of 3.6 million barrels a day. That is, the production of the Islamic Republic, Saudi Arabia, should be 100 thousand barrels per day lower than Algeria.
And even if this requirement is not extended, Iran is able at the last moment to refuse to cut, deciding to achieve out to those pre-sanctions 4 million barrels per day. As previously noted by the representative of the National Iranian oil company, the decision to freeze or reduce production in case of Iran would be political.
Later on Wednesday, the Iranian energy Minister, Bijan Namdar Zanganeh said that Iran freeze the prey in any case not going to. But the final production of the country will be determined at the November OPEC meeting.
“The Gulf countries are quite capable to work and increase production in the current price environment, for the countries of Africa and Latin America oil production is on the verge of profitability, and for the individual countries and beyond,” — said the head of Board of Directors engineering company “2K” Ivan Andrievsky.
