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On April 9th, extraordinary, meeting of OPEC+ took place, and it was held via a webinar, due to the COVID-19 pandemic.
The 9th (Extraordinary) #OPEC and non-OPEC Ministerial Meeting has started. The Meeting is being held via webinar in light of recent developments surrounding the #COVID-19 pandemic. pic.twitter.com/8s0KFYFya7
— OPEC (@OPECSecretariat) April 9, 2020
Its purpose is to reach a conclusion to the Saudi Arabia-initiated oil price war against Russia, and to stabilize the failing oil prices, in order to avoid a complete crude oil market crash, amidst an epic fall of demand.
According to unnamed Reuters sources, the production cut could be as big as 20 million barrels per day.
Prior to the beginning of the meeting, African Petroleum Producers’ Organization (APPO) issued a statement in support of the concentrated efforts to avoid a further deterioration of the situation.
Communique of the African Petroleum Producers’ Organization (APPO) reiterating support for concerted efforts of #OPEC and non-OPEC countries in ensuring long term stability of the global oil market. pic.twitter.com/L9ZB9ShzDf
— OPEC (@OPECSecretariat) April 9, 2020
After it began, Saudi Prince Abdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy welcomed everybody and applauded the efforts in dealing with the situation that Riyadh itself initiated.
HRH Prince Abdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy, welcomed all participants to the 9th (Extraordinary) #OPEC & non-OPEC Ministerial Meeting and commended their commitment towards stability and the global oil market, particularly during these challenging times. pic.twitter.com/bue2jYOjQl
— OPEC (@OPECSecretariat) April 9, 2020
Mohamed Arkab, Algeria’s Minister of Energy and President of the OPEC Conference 2020 also applauded the efforts to resolve the crisis.
HE Mohamed Arkab, Algeria’s Minister of Energy and President of the OPEC Conf, lauded the efforts undertaken by participating oil producing countries in holding today’s meeting. He also referenced the unprecedented human tragedy caused by COVID-19 and its impact on the oil sector pic.twitter.com/5KKBDt3iB7
— OPEC (@OPECSecretariat) April 9, 2020
Russian Energy Minister Alexander Novak said:
“I thank his royal majesty Abdulaziz bin Salman al Saud, with whom we conducted intensive negotiations on the situation on the world market and ways to stabilize it, as well as the head of OPEC Mohammed Barkindo.”
In his opening remarks Mohammed Barkindo said that the COVID-19 crisis is without precedent.
“Only one month ago at the meetings in Vienna, expected 2020 global GDP growth was 2.4%. Today, it is a negative 1.1%. It is incredible to think that the global contraction is far greater than that for the Great Recession of 2008-2009.
In early March, expected 2020 global oil demand growth was just below 0.1 mb/d. Today, we are looking at a contraction of 6.8 mb/d, with the second quarter alone close to 12 mb/d and expanding. These are staggering numbers! Unprecedented in modern times.”
Thus, production according to him should be cut, as there would potentially be 14.7 million bpd in excess in the second quarter of 2020.
“All the producers here, OPEC, OPEC+ and other producing nations that have taken it upon them to responsibly join the meeting today, need to recall the severe market imbalance 2014-2016. It was when oil producers lost trillions of dollars in foregone revenues, and globally more than $1 trillion was lost in terms of investment.”
If nothing is undertaken, in his view, the current situation would be much worse.
Finally, as a result, Russia and Saudi Arabia agreed on the contours of a deal to rectify the oil price slump.
Saudi Arabia is committed to reduce production by 4 million barrels per day, and Russia by 1.6 million.
It would seem that Russia is better off, but not quite: the reduction is from the current production, and it has been announced by Riyadh in recent weeks that it increased production to 12.3 million barrels per day, which is 2.4 million more than before it started flooding the market with discounted crude oil.
Prior to that, the Kingdom produced 9.9 million barrels per day.
Thus, effectively, both Russia and the SA pledged to reduce 1.6 million barrels per day. Back on March 6th, when Riyadh began the oil war, the offer was a reduction of 1.5 million barrels per day.
Essentially, a slightly worse version of the March 6th agreement is not acceptable.
The intrigue is now whether other non-OPEC + countries, first of all the United States, will join the agreement.
On April 10th, Saudi Arabia will host a meeting of the energy ministers of the G20 and then there will be further clarity on what the future course of action is.
The apparent detente was felt immediately, as US West Texas Intermediate crude rose 12% to $28.36 per barrel at intraday highs. International benchmark Brent crude gained as much as 11% to $36.40 per barrel. Both pared gains midday as traders digested the lastest developments.
The total OPEC+ cut is expected to be around 10 million barrels per day, with WSJ even reporting that Russia would cut as much as 2 million barrel per day. And if this is true, then Russia would be even worse off than if the presumed March 6th deal had been accepted.
On top of the 10 million barrel reduction per day aimed from OPEC+, it is expected to ask the G20 to reduction production by 5 million, to a total of 15 million barrels per day reduction.
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I don’t see actual deal reports. What I see in this article is that a meeting started and there are some expectations. South front, I understand that your team is not homogeneous but this doesn’t mean that you should turn into another MSM like media. Credibility takes long and it is hard to build but it is easy too loose.
Doubt the 10 million bpd is even real. “Riyadh in recent weeks that it increased production to 12.3 million barrels per day, which is 2.4 million more than before it started flooding the market with discounted crude oil.” US is not officially part of the deal, but when oil producers cut down on expenditures to drill new wells, the decline in production will happen for economic reasons.
Those oil producing countries and their companies seem to conveniently forget that the consumer doesn’t mind lower fuel prices and lining their pockets is not in our best interest. Here in Australia we currently pay $1.30 for a litre of 98 octane, prior to the ‘crisis’ $1.60 per litre which is BS. Bring the prices down and those oil producing countries can survive quite comfortably in reducing their prices.
Thats why I don’t care about any of their problems,when truth reveals russia is #1 and they call the shots here on in,(too capable)not usa,not opec,it certainly shows @59.9 cents per litre for 95 ron, which is over 3x less than when opec/usa were pilling the strings?No more lies,this is true stimulus! Do the math on 75 liters:
You pay 1.3 dollars per litre (Same as my country Sweden) due to taxes on gas and oil imposed by your government,
Like to see the price go well below a dollar per litre; we pay enough taxes here also.
Oil Cartels and our governments all in cahoots to get to our hard-earned cash. It is a fine-tuned setup (read: “market”) that has been developed for a century now and it will take a revolution to break it apart. Everyone in this setup benefits high prices and the ONLY looser is the end-user (us). If it is a market and prices locally go up the same day someone from OPEC so much as farts, why don’t the prices locally go down as they do internationally? Numerous “commissions” done to find the “truth” and turned out just white-washing the existing situation (at a cost of credibility to the numerous so called scientists, specialists, politicians, etc…) there is obviously no representative of end-users in any part of this “market”. Kind of like that MH17 fact-finding commission (JIT) not including Malaysians for the first 2 years (until the frame-up was set in concrete)…
Don’t need them,they only serve the nwo global tryranny regimes,russia is the key not usa (period) fuel is cheaper and helps all familys and running fost of buisness better for peoples,russia is the godsend, opec can rot in hell for truth cares!Not into nocando creeps who only complain about their profit scams,no! This is only another desperatos attempt,but it’s fail allready,see how cunning opec are?
Russia will let them do what they feel is right,but here on in russian policy remains unchanged,get over it!