Russian Deputy Prime Minister Alexander Novak and energy Minister of Saudi Arabia Prince Abdulaziz bin Salman are preparing for the meeting. These are informal consultations on the eve of the OPEC + monitoring committee. What are the arguments for balancing the market?
The key countries participating in the OPEC + agreement cannot agree on how much it is worth reducing oil production. And to find a better understanding, Moscow and Riyadh will hold telephone consultations with the OPEC+ monitoring committee.
The production reduction agreement has been in effect since April. It assumes a reduction in production by 9.7 million barrels per day in May-June, by 7.7 million in the second half of the year, and 5.8 million barrels per day until the end of April 2022.
On November 16, a regular meeting of the OPEC + technical Committee was held. According to media reports, the majority of countries supported the extension of production cuts. In particular, Saudi Arabia called on other members of the agreement to be flexible in responding to the oil market’s needs, including being ready to change the agreement’s terms if necessary.
Russian Deputy Prime Minister Alexander Novak, who oversees the fuel and energy sector, noted the importance of joint efforts to balance the market but did not say whether Russia is ready to extend production cuts in 2021. According to him, these agreements serve as an example of unprecedented efforts, including fulfilling voluntarily assumed obligations.
The market says that one of the OPEC+ response options may be to extend the current cuts of 7.7 million b/d for 3 to 6 months. A meeting at which a final decision can be made is scheduled for December 1. Meanwhile, the benchmark Brent quotes are getting closer to the round $ 50 mark. Demand continues to be weighed down by the rate of spread of coronavirus in the world and quite significant stocks of oil and petroleum products in the United States.