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Wednesday, March 21, 2018

OPEC refused to freeze oil production: what is Russia

The results of the meeting of OPEC countries, which took place on 2 June in Vienna, not instilled confidence in the participants in the oil market regarding the future of the mining industry. The agreement on the freezing of production, which insisted that some members of the cartel, has not been reached. This means that the excess fuel will remain in the world that could have a negative impact on prices. But this meeting gave a certain and positive. The new Director General of the OPEC has chosen the former head of oil company Nigeria Mohammed Barkindo. His country had lately sympathized with Russia, insisting on the reduction of world production. It is hoped that he will persuade representatives of the organization of petroleum that the idea is ultimately implemented.

photo: morguefile.com

The world’s major producers of “black gold” continue to juggle the rumors about the possible freezing of raw material extraction at the level of January. Currently, even with the fall in oil production in the U.S. a surplus of the fuel on the planet is not less than 2-2,5 million barrels per day. The main culprit of the majority of experts of Iran, which after the lifting of sanctions has dramatically increased production.

But there are other factors. The oil cartel OPEC, which earlier tried to demonstrate a unified front in the fight for world domination on the market, split into several irreconcilable factions. Some countries, such as Venezuela, in favor of the rejection of increasing the rate of extraction of raw materials. Others, such as Saudi Arabia and Qatar, are opposed to this. They are afraid that Tehran due to cheaper prices will intercept the part of clients.

Talks about the freezing of production are being carried out virtually continuously. And not only among OPEC countries, but also between States not members of the cartel. A meeting of the major producing countries in April in the Qatari capital Doha failed — compromise and failed to achieve. All the efforts of Russia other participants, especially Saudi Arabia, refused.

This same issue was discussed in a meeting of OPEC oil Ministers on June 2. But the final decision that could affect the existing situation on the world market of “black gold”, was not accepted. April data showed new growth daily oil production of the countries of the cartel and no restriction for this. It is obvious that the market may face a new wave of expansion of the oil supply, because increasing production almost all of the participants of the OPEC, and the demand for energy remains fairly modest.

Nevertheless, certain shifts are observed. The new Secretary-General of OPEC at the June meeting of the cartel has become the representative of Nigeria Mohammed Barkindo. According to senior analyst of Alpari Anna Bodrova, he is an experienced oilman. Barkindo temporarily fulfilled the role of head of OPEC in 2006. Now that he will have to assume organizational and political objectives of the cartel.

Barkindo will take powers from 1 August 2016. He will have enough time to coordinate with other OPEC members freezing of oil production and dramatically affect the price situation on the world market. It is expected that the next OPEC meeting will take place on November 30.

The head of the cartel from Nigeria, experts say, quite a good choice, if you touch Russia. Nigeria has supported Moscow in the control of the world oil fountain.

However, the main voice in the solution to the problem is to cut production or not will be for Saudi Arabia, which continues to insist on the expansion of its mining potential.

However, from Riyadh and received more positive news. On the sidelines of talks in Vienna, one representative of Saudi Arabia stated that his country is interested in participation of Russian investors in privatization of national oil company Saudi Aramco. It owns the second by the size of the oil reserves in the world whose market value is estimated at $319 billion At present, Aramco controls more than 10% of world production. However, there are Russian businessmen have money to buy at least a small stake in Saudi Aramco, is not clear. In fact, according to experts, the Saudi oil giant could be valued during the initial offering of the shares at $2.5 trillion.

Rising prices and a falling ruble. Chronicle of events

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