The Oil Agreement

It was not immediately clear whether the Trump administration had made a formal commitment to cut production in the United States, but in the face of falling prices, many companies in the country have already cut production. There is no international mechanism to strictly impose such production agreements and fraud is commonplace. The talks were complicated by differences between Russia and Saudi Arabia, but on April 2, oil prices rose after President Trump signaled that he expected the two countries to end their feud. Saudi Arabia and Russia typically take the lead in setting global production targets. But President Trump, faced with a re-election campaign, a plummeting economy and U.S. oil companies grappling with falling prices, took the unusual step of engaging after the two countries entered a price war a month ago. Mr Trump had made a deal a key priority. Sunday`s deal follows a busy week for oil ministers. On Friday, the Group of 20 held a separate virtual meeting to discuss the state of global oil markets, raising speculation that more production cuts may be possible. (The G20 includes producers like Canada and the U.S. that are not participating in the OPEC+ cuts) However, this meeting ended without any new commitments being publicly announced. “This is an unprecedented agreement, because it`s not just Opec and Opec+.

but also the world`s largest supplier, the United States and other G20 countries, which have agreed to help both reduce production and reduce some of the surface supply through storage,” Sandy Fielden, director of oil research at Morningstar, told the BBC. Sunday`s deal was the result of more than a week of phone talks with Trump; Saudi Crown Prince Mohammed bin Salman; and President Vladimir W. Putin of Russia. Lord. Trump welcomed the deal, saying on Twitter it would “save hundreds of thousands of energy jobs in the United States.” “By the grace of Allah, then with wise direction, continuous efforts and continuous conversations since dawn on Friday, we now announce the conclusion of the historic agreement, production from January 1. May 2020 by OPEC+ members to cut about 10 million barrels of oil per day,” Dr. al-Fadhel wrote in a tweet. Under the agreement, members of the Organization of the Petroleum Exporting Countries, along with Russia and other countries, will increase production by 500,000 barrels per day in January and possibly by a similar amount in the following months.

The less than 1 percent increase in the global oil market comes as demand is still under pressure from the effects of the coronavirus pandemic. As a result of the COVID-19 pandemic, plant production and transportation demand have fallen, which has also led to a decline in overall oil demand and lower oil prices. [14] On February 15, 2020, the International Energy Agency forecast that demand growth would fall to its lowest level since 2011, with growth decreasing by 325,000 barrels per day over the full year to 825,000 barrels per day and a drop in consumption of 435,000 barrels per day in the first quarter. [15] Although global demand for oil has declined, a drop in demand in Chinese markets, the largest since 2008, triggered an OPEC summit in Vienna on March 5, 2020. At the summit, OPEC agreed to further cut oil production by 1.5 million barrels per day by the second quarter of the year (an overall production cut of 3.6 million barrels per day compared to the original 2016 agreement), with the group due to review the policy on June 9 at its next meeting. [16] OPEC has asked Russia and other non-OPEC+ countries to comply with the OPEC decision. [13] On March 6, 27, 2020, Russia rejected this request, marking the end of the unofficial partnership, with oil prices falling 10% after the announcement. [17] [18] The latest news regarding the effectiveness of vaccines in fighting the coronavirus, which has pushed oil prices to their highest level since falling in April, likely made it harder to reach a deal. . . .

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