Then the countries — participants of the agreement have not agreed on the extension of the deal: Saudi Arabia has offered to further cut production, Russia insisted that to leave it unchanged. After the announcement of the non-renewal of the deal, oil prices collapsed, losing about 30%. After that, they continued to fall and even went into negative values.
In the first half of April, the parties entered into a new agreement, OPEC+. Under the terms of the country’s total cut production at a record 9.7 million barrels a day. The agreement is valid until July 1, then the volume will gradually increase. It was planned that by that time the situation on the market stabiliziruemost. And according to experts, the agreement is a major factor in the current growth of cost of oil.
Among other equally important factors
the gradual recovery of demand due to the lifting of quarantine measures and reduction of oil reserves in the United States
But there are others, which can affect not only slowing the growth in oil prices, but also to provoke another deep drop.
First, events that occur in America have questioned the rapid recovery of one of the most powerful economies in the world. In addition, the price of 40 dollars per barrel kancevica allows us to launch previously suspended wells, which will affect the strengthening of the proposal.
There is another reason to curb the growth – uncertainty about the upcoming meeting of OPEC+.
What’s wrong with the cartel
First, there is confusion with the date. Earlier the meeting was scheduled for June 9-10. Later, the Minister of energy of Algeria Mohamed Arkab proposed to move it on 4 June (5 June Saudi Arabia should announce the prices next month). As claimed by sources to Reuters, Russia on the date agreed. But there were no ads in the future, on the transfer date. As well as acknowledgement.
The second meeting can be cancelled altogether. Negotiations could not take place if a number of countries, including Iraq and Nigeria, do not give firm commitments to comply with their obligations, according to the interlocutors of the Agency.
Russia and Saudi Arabia supposedly has taken a tough stance on this issue.
However, to overcome their differences cannot themselves key participants in the transaction.
The Saudis want to extend the restrictions for another two months, that is, to abandon the previously planned increase of production. In Russia the position is uncertain: some companies are in favour, others opposed.
The final decision should be taken by Vladimir Putin, and how it will be – is unclear. In early June it became known about his talks with Donald trump. But the specifics in question is not made:
“It is stated that this multilateral agreement reached with the active support of the presidents of Russia and the United States, leads to a gradual recovery in oil demand and stabilize prices”, — stated in the message of the Kremlin.
A few days before that, Putin held talks with representatives of Saudi Arabia. Judging by the reaction of the market and fragmentary statements, constructive conversation did not happen.
Less oil than is commonly believed?
In late may, the audit chamber of Russia published a report on the state of mineral resource base of the country in the years 2015-19. It implies a very curious detail
– the oil and gas reserves in Russia can be much less than is commonly believed
That is, oil and gas companies tend to overestimate the explored deposits, reporting on the state of natural resources. On average, each year Russia writes off from the state balance was “fake” reserves of hydrocarbons to almost the same extent which annually drains from the bowels.
In sum, from 2016, was recognized as in reality non-existent reserves of oil and condensate at 2,278 billion tons, which is almost five annual volumes of extraction.
Over the same period
for non-verification had to be written off 6,041 trillion cubic meters of gas — more than nine annual production volumes
The report says that the effectiveness of geological exploration performed at the expense of the budget, “unreasonably overestimated”.
According to authorities, the available reserves are inferred resources with a likelihood of confirmation of 25-35% and below.
“At current production levels (550 million tons per year) oil reserves will last for 35 years, gas — to 50. Two-thirds of the oil fields falls on the tight oil, mostly located in the Arctic (60%). Its production is expensive and requires modern technology. If we exclude the marginal deposits of oil remained in the country for 20 years”, — stated in the review report.