Russia agreed with its three member countries of OPEC to freeze oil production at the January level. However, this plan can be implemented only under one condition – if a similar move will make and the other 10 OPEC members. Whether embodied this idea and is it possible to return the price of black gold at least to a comfortable 50 dollars per barrel?
Energy Minister Alexander Novak said that Russia, Saudi Arabia, Qatar and Venezuela are willing to freeze oil production at the level of 11 January, reported Bloomberg on Tuesday. Novak arrived in the Qatari capital Doha and meets with the Ministers of petroleum and energy of these four countries that are part of the Organization of countries – exporters of oil (OPEC).
“Fixing production levels in January – it’s more like a natural state of Affairs. Above the January levels, perhaps, and not to jump now”
However, there is a prerequisite for the agreement was implemented. Other manufacturers should also join this initiative, said Novak.
Rosneft has already stated that it welcomes the desire of oil producers to reach agreements to stabilize the situation on the market. However, to assess the impact on the market is difficult.
“While the parameters of this arrangement are such that they cannot comment, they are not known or understood. The only thing that we can say that it is very good that market participants are talking, they tend to find an agreement – it’s all wonderful. It is better to give the market positive news than his “nightmare,” said Vice-President of Rosneft Mikhail Leontyev.
The Ministry also considers it premature to speak about long-term consequences for the ruble and in oil prices the outcome of negotiations in Qatar between Russia and OPEC. “Too many factors affect the situation,” he said, reports RIA “Novosti”.
There are several important points that remain unidentified. First, it is unclear what is the position of Iran, which has repeatedly stated that he is not going to reduce production, but intend, on the contrary, to increase, to regain the positions lost during the Western sanctions.
There is also the question of how Saudi Arabia plans to comply with the agreements and to control not only the reduction but also the increase in oil production in OPEC countries, especially Iran.
With control over the level of production within OPEC is in serious trouble. At a meeting in the fall in OPEC has openly admitted that is known throughout the market: the members of the organization have long extracted oil more than the allocated quotas. In the end, the organization had to increase the quota, only to bring it into accordance with the real situation. Therefore, there is no guarantee that exporting countries will fulfill the requirement of OPEC to reduce production now.
Director General of national energy security Fund Konstantin Simonov is not inclined to trust the Saudis and OPEC. “They are not able to establish discipline within OPEC. As we know, they make a decision to reduce the quota, but no one cuts, each lying. It will need to enter the group of experts who would be watching, how much shipped to oil terminals. But this is a controversial story. Here ISIS sells 0.5 million or 1 million tons of barrels per day (still not known), all of it passes through Turkish ports, but these volumes are not reflected”, – says Simonov.
“To go in this scenario is misleading. They in themselves violate OPEC production limit at 1.5–2 million barrels per day. So what agreement can there be? How will be monitored the prey?” – agrees zamgendirektora of the national energy security Fund Alexander Pasechnik.