A work published by El País reflects that the price war between oil powers is coming to an end, and that 34 days after the resounding rupture between Saudi Arabia and Russia, second and third largest world producers of crude oil, have reached an agreement this Thursday to apply a severe cut on the supply of up to 10 million barrels per day, according to what was published the country
By Miami Diario Newsroom
Analysts estimate that another five million from foreign producers, such as the United States, will have to be added to this figure, with the aim of putting a stop to the recent bleeding of prices
Another aspect addressed by the research is that the covenant It shows that, no matter how much they can resist it for a few more weeks, nobody is interested in a Brent at 30 dollars and, even less, in the vicinity of 20 dollars, to where it has fallen in the final stretch of March. And he predicts a greater future stability for some producing countries that, in some cases, they were already being forced to sell below cost in the face of global demand that has fallen by more than 30% since the globalization of the pandemic. However, the market, which initially responded with strong gains, gradually turned red as the thesis prevailed that the movement, even large, will be insufficient to rebalance a deeply unbalanced market.
One thing to consider is that the agreement between the Organization of Petroleum Exporting Countries (OPEC, led de facto by Saudi Arabia) will mean the rgradual withdrawal from the market of just over a tenth of world crude oil production, a substantial figure at a time when supply and demand are more unbalanced than ever before. "The coronavirus is a beast that has not been seen before, which takes everything that is on the way ahead," said OPEC Secretary General Mohammed Barkindo, in the speech with which the teleconference began, which had Bloomberg access. "The fundamentals of supply and demand are horrendous."
Another element to consider is that what was sealed this Thursday should be joined on Friday by both the US and Canada, Brazil or Norway, all countries outside the cartel but with a growing market share in recent times and whose commitment is conditioned by everything. The final cast is divided, roughly, to thirds: Moscow and Riyadh will cut five million barrels per day between them and both the rest of the partners of what is known as OPEC + or enlarged OPEC and the external group will have to work hard to cut another five million barrels each. The meeting of the G20 Energy Ministers (the 20 largest powers in the world) this Friday seems key to closing the last fringes and initialing all the details.
It should be noted that the month that has elapsed since the quintessential oil cartel and Russia consummated their divorce has served for many to rethink their starting positions, calibrate impacts in the midst of the collapse of demand due to the coronavirus and, in short, draw some conclusions. blunt. First, that even surpassed in production by the US and with battered public finances, Saudi Arabia continues to be the country with the greatest muscle to withstand price environments as low as the current ones. Second, that Russia has more capacity to withstand the Saudi attack —which in this period has flooded the world market, plummeting prices— than many predicted. Third, that the fracking It has allowed the US to become the leading global oil power but it suffers in environments with prices as low as the current ones. And fourth, and most importantly, none of the above is interested in or can afford a depressed market for long.
With information of: the country
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