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Saudi Arabia and Russia return to the negotiating table on Thursday to save a struggling oil market. Now they will agree to cut production again, but the price of oil will drop.
Oil prices have fallen just under 50 percent since the turn of the year due to a “double collapse” of reduced demand and a price war between Saudi Arabia and Russia.
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The OPEC oil cartel and other oil-producing countries, with Saudi Arabia and Russia at the forefront, are currently holding a video meeting to discuss a new cut deal in the wake of the viral crisis.
Oil prices have fluctuated significantly during the day due to uncertainty about whether the oil countries will be able to reach a consensus.
Now, however, they should have agreed on a deal during the meeting that started at 4 p.m. Norwegian time, news agencies like Reuters and Bloomberg report. They refer to unnamed sources.
Thursday’s messages have not been confirmed. Details of size, distribution and length have also not been confirmed.
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Cutting edge messages on cut size
First, cuts of up to 20 million barrels per day were reported around 4:30 p.m., which raised the price of oil.
Since then, it has regressed and is down 5.7 percent on the day at $ 32 a barrel. This happens after Bloomberg announces that the agreement will be 10 million barrels per day for Opec +, and that this will be binding for the next two months.
On Thursday night, the price of oil fell about 12 percent from the daily peak reached after the 20 million barrel cut.
The countries of Iran, Libya and Venezuela should be excluded from the cut agreement, writes Bloomberg.
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 necessarily be enough to balance the oil market.
According to Rystad Energy, 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 major 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.
Oil importers from the G20 countries 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 on 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.
