shine trader live reports:
After the meeting, the ministers of the member states of “OPEC +” (i.e. OPEC, the organization of oil producing countries, and its allies of non member states led by Russia) issued a communiqu é announcing that they decided to maintain the previously agreed plan to gradually increase oil production. According to the report of Russia’s businessman, the total output will be increased by 400000 barrels per month from August until the current production reduction quota is offset, that is, the output will be reduced by 5.8 million barrels per day based on the output in October 2018. Except for Russia and Saudi Arabia, the base numbers of the two countries are calculated separately.
Substance of the agreement
The participating ministers believed that although the new crown pandemic brought some uncertainty, due to the strong performance of market fundamentals and the continuous decline of crude oil commercial reserves in OECD countries, it can increase production. For example, U.S. commercial crude oil reserves decreased by 7 million barrels last week. The communique said that the “OPEC +” countries completed 110% of the production reduction plan in July. The participating ministers agreed to extend the commitment period of “catch-up” production reduction to December for countries that have not completed the production reduction quota, especially Iraq and Nigeria. The next “OPEC +” ministerial meeting is scheduled to be held on October 4.
Russian Deputy Prime Minister Novak said that this decision will increase Russia’s oil production by 100000 barrels / day in September and continue to increase by the same amount in October. He predicted that at this rate, Russia’s oil production will return to its pre crisis level by May next year. The decision of “OPEC +” to increase production by 400000 barrels / day is the result of difficult negotiations with the United Arab Emirates. In early July, the UAE prevented “OPEC +” from reaching an agreement on increasing production and demanded to increase its baseline production used to calculate the reduction. In order to bridge their differences, other Member States made concessions in mid July to increase the base of five countries (Russia, Saudi Arabia, UAE, Kuwait and Iraq). On the whole, the validity period of the agreement will be extended from May to the end of next year. Ministers of “OPEC +” countries will meet every month during this period and determine the output of next month according to market conditions.
Alexeperov, President of Russia’s Lukoil company, announced that the company has applied for approval of about 30 million tons of reserves in North lakushka oilfield. “We will build a pipeline to the filanovsky oilfield, which may be put into operation in 2028,” he said, adding that the first well drilled by titonskaya in the Caspian Sea had a high inflow. “We have drilled a second well. It is difficult to talk about reserves now, because we have to drill at least one more well to understand how large the oil field is. Khazri has also found oil fields. Although they are not as big as kitonskaya, they will be developed as an oil field because of their small distance from each other, which is very cost-effective,” he said
Evgeny mironyuk of the Russian “free finance” company said: “there is no doubt that it will continue to increase production. The views of most member states of ‘OPEC +’ and the growth trend of U.S. production strongly prove this. The data show that the number of active oil drilling platforms in the United States in August reached the highest since April 2020 (410). Add” OPEC + ” He said that at present, the international oil price is basically stable at more than $70 a barrel.
Andrey Maslov of finam financial group said: “On the whole, OPEC’s decision to maintain its previously approved oil production rate is in line with analysts’ expectations. OPEC Secretary General Bardot and NATO experts have said COVID-19 will not have a serious impact on the oil industry, because the speed and accumulated experience of the vaccination has helped to combat COVID-19.” He said that the increase in oil production will have a positive impact on the recovering world economy, and the oil market is coming out of the supply shortage necessary to support oil exporting countries to achieve budget balance. ”
Maslov said: “The imbalance in the oil market and high energy prices are unfavorable to both producing and consuming countries, because prices higher than $80 / barrel may slow down the economic recovery and reduce energy demand. Since the beginning of summer, the oil price has been stable in the range of $68-75 / barrel, which is acceptable to both exporting and importing countries. If the current trend can be maintained, the oil price will be stable in the range of $65-72 / barrel by the end of the year.”
OPEC said on Monday that the global demand for oil will exceed the pre epidemic level next year as the vaccination rate continues to rise and the public is more confident in the ability of the government to control COVID-19. The global demand for crude oil will be 96 million 680 thousand barrels per day. Next year, oil demand is expected to increase by about 4 million 200 thousand barrels per day to 100 million 800 thousand barrels per day.