OPEC + Baku meeting will create precondition for extension of deal - COMMENT

Analysis of statistics on the volume of black gold production by OPEC + countries at the joint technical commission and the meeting of the monitoring committee of oil producers in Baku, will create precondition for solution at the meeting of the oil cartel in April. Report was told by Director of the Russian Energy Development Fund Sergei Pikin.

According to him, the possibility of extending the transaction to reduce oil production depends on three factors: First, at the end of April and beginning of May, term of exemptions from sanctions granted by US for oil importers from Iran expires. "Depending on whether these exemptions are partially extended or completely lifted, it will be possible to predict the volume of exports from Iran.

The second point is related to the sanctions against Venezuela, which are expected by the end of April, and the extent to which the supply on the market will decrease”, - he noted.

S. Pikin connected third factor with the presence of supply and demand in the global oil market. The expert did not rule out that while moderation of the US policy on consumers of Iranian and Venezuelan oil, OPEC + countries can maintain restrictions on the level of production and even extend them for a certain period.

At the same time, S. Pikin noted that at the moment there is no shortage in the market. Missing volumes of oil from Iran and Venezuela are compensated by other producing countries. The expert on the oil and gas market, partner of RusEnergy, Mikhail Krutikhin, agrees with his opinion, who told Report that, shortfall in the volume are provided by Saudi Arabia, Russia, the USA and others.

Both experts believe that the current situation in the oil market is stable, and the prices observed in the last two months in the range of $ 60-65 per barrel are quite satisfactory for both oil producers and consumer countries, including the US, acting as independent player.This indicates the achievement of the so-called consensus between the parties.

Notably, from January 1, 2019, 11 OPEC countries and 10 non-OPEC countries reduce production by 1.2 million barrels compared to October 2018. In total OPEC countries should reduce production by 800 thousand barrels per day, non-OPEC - by 400 thousand barrels per day.It was extended for six months with a possible revision in April 2019.As part of this agreement, Azerbaijan should reduce oil production by 20 thousand barrels per day from the current year with respect to the indicator of September 2018 up to 776 thousand barrels.

Afet Hasanova