Why do OPEC and its allies want to come back to lower oil production?
News from Paris
Date: Wednesday, November 7
PARIS (Reuters) – Leading oil producers may revert to the possibility of reducing production to support market prices, while alleviating concerns over the collapse of supply in relation to American sanctions and expectations for record production in the US.
On Wednesday, the large source of Opec announced that the return of the OPEC alliance and non-OPEC producers managed by Russia could not be ruled out by reducing oil production in 2019. To avoid a potential supply gap that could put pressure on prices, Reuters said.
The source said that Russia and Saudi Arabia began bilateral talks on possible cuts in oil production in 2019.
The agency cited an unnamed source, saying that Saudi Arabia has initiated a study to reduce production in the coming year.
OPEC and its allies – including Russia – decided in June to ease the production restrictions in force since 2017. After the pressure from US President Donald Trump to lower oil prices and compensate for the shortage of supplies in Iran.
On Sunday in Abu Dhabi the ministerial committee of OPEC members and allies will meet to discuss the market situation and prospects for 2019.
The current cut-off agreement, which began in early 2017, ends in December.
The price of crude oil now fluctuated around USD 72 for Brent oil, dropped from the highest level in 2018, Registered last month, and reached USD 86 per barrel.
The second delegate of the Organization of Oil Exporting Countries (OPEC) in response to the question whether the talks indicate a return to cut production in 2019: "Certainly not the other way around."
Oil prices have come under the pressure of growing supplies, despite expectations of lower Iranian exports due to new US sanctions.
Expectations of excess supply and slowing demand in 2019. Also negatively affect the market.
Data and Outlook
The Nigerian oil minister, Emmanuel Epe Cachico, said on Tuesday that OPEC needs data on the impact of new US sanctions on Iran, adding that its production may not reverse the rapid decline that some predicted.
|Expectations of excess supply and slowdown in demand in 2019. Negative impact on the market (Reuters)|
The wave is low
Bloomberg's forecasts for oil prices will be the longest to fall since 2014. Concerns about the decline in inventories have eased as a result of temporary US layoffs for eight sanctions on Iranian oil imports and expectations for higher US production.
The US government expects oil production to rise at a record pace this year, as industry data suggests US stocks rose last week.
At the same time, the redundancies granted by the United States to the G8 would allow Iran to export some of its oil to its largest clientele for six months.
The agency underlined that fears of a decline in supplies – which led to oil prices up to four years last month – have fallen as a result of speculation that the US will ease sanctions Oil prices at home.
In the United States, government estimates indicate that this year will see the largest annual increase in domestic oil production.
According to the US Energy Information Agency, the average production is expected to reach 10.9 million barrels a day this year, compared to 9.35 million in 2017, the highest increase ever.
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