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Oil prices drop significantly after Saudi Arabia and Russia have agreed to production cuts that are not large enough to balance the market. It has now risen 12 percent from the peak of early Thursday.
Oil prices have dropped about 50 percent since the turn of the year due to a “double meltdown” in the oil market, with demand like rage and production increasing.
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The OPEC cartel and other oil-producing countries, with the giants of Saudi Arabia and Russia at the forefront, are currently holding a video meeting to discuss a new court deal. This is due to a crisis in the oil market.
Oil prices have fluctuated markedly throughout the day and night in light of recent reports.
First, a cut of 20 million barrels per day was discussed. That raised the price of oil, but countries should agree to cut 10 million barrels a day, according to news agencies like Reuters and Bloomberg. This will be binding for two months from May 1.
– Much lower than the market needs
Evolution has reduced oil prices.
Since the peak earlier today, at 8.45pm, it has dropped about 12 percent to $ 31.5 a barrel.
“A deal of 10 million barrels per day is much lower than the market needs at the moment,” says Bjørnar Tonhaugen for the oil market at Rystad Energy in a comment.
Thursday’s messages have not been confirmed. Details of size, distribution and length have also not been confirmed.
OPEC also wants the G20 countries, which meet on Friday, to cut five million barrels a day, according to Bloomberg.
– Without agreement, the consequences will be brutal
The cut of 10 million barrels per day will mean the largest OPEC cut in history, but several have predicted in advance that such a cut deal will not be enough to balance the oil market.
According to Rystad Energy, oil demand will drop to 28 million barrels per day in April and 21 million barrels per day in May.
The fall in demand due to the crown crisis and a price war between OPEC and Russia, which previously had a reduction agreement (Opec +), have led to a dramatic drop in oil prices from the barrel of $ 66 in the New Year to $ 21 a barrel in the lowest in March.
“Without an agreement, the consequences will be brutal, and we expect oil prices to reach new levels for the year if this happens,” said oil analyst Helge Martinsen at DNB Markets ahead of the meeting.
This is in part because oil reserves are now filling at record speed.
A key uncertainty surrounding a possible reduction agreement is whether Saudi Arabia and Russia will require the United States to formally commit. This is what the country, which is not part of the Opec + collaboration, has said is outdated.
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Norway observes
Norway participates with expedition manager Lars Erik Aamot at the Ministry of Oil and Energy as an observer at the OPEC meeting on Thursday.
E24 has also been confirmed by Tina Bru’s Minister of Oil and Energy to attend an extraordinary energy meeting with the G20 countries on Friday.
G20 oil importers may announce oil purchases to support oil demand at the meeting on Friday, Fatih Birol, head of al-Arabiya TV’s International Energy Agency, said Thursday.
Oil giant Saudi Aramco was planning to announce prices for May as early as Thursday. This should be postponed until Saturday due to the meetings.
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