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Saudi Arabia and Russia in a video conference on April 9 agreed on a plan for a new agreement to reduce oil production. The price of oil has already started to rise sharply.
About this with reference to representatives of negotiations, reports Bloomberg.
Oil prices have risen since the collapse of the previous day: markets await OPEC meetings
Details of the agreement between Russia and Saudi Arabia
- This is a reduction of approximately 20% of world production, up to 20 million barrels per day.
- At the same time, both sides still differ on the baseline of these reductions.
What is OPEC? An international organization created by the oil exporting countries. Its main objective is to control the allocation of quotas for oil production. OPEC member countries control approximately 2 thirds of the world’s oil reserves. OPEC is made up of 14 countries: Algeria, Angola, Venezuela, Gabon, Iran, Iraq, Congo, Kuwait, Libya, the United Arab Emirates, Nigeria, Saudi Arabia, Equatorial Guinea and Ecuador. OPEC + is an OPEC country, in addition to Russia, Kazakhstan, and Azerbaijan (the key producers are Saudi Arabia and Russia).
How the market reacted
- Immediately after the announcement of the Moscow and Riyadh agreements, the price of oil began to rise sharply.
- In particular, on the London Stock Exchange, Brent oil reached a mark of $ 36 per barrel.
- WTI futures rose 9.57% to $ 27.49 per barrel.
Pay attention! Following the announcement of the deal, the Russian ruble began to grow. The Russian currency strengthened to 73.7 rubles per dollar.
What is known about the collapse of oil prices in March
- On March 6, 2020, OPEC countries were unable to negotiate and extend an oil reduction agreement. Therefore, as of April 1, all restrictions on oil production will be lifted. In Russia, they stated that the OPEC agreement did not satisfy their interests.
- Since then, the increase in oil production in Russia has depended only on the plans of the oil companies, which is an opportunity to increase the production of “black gold” without control.
- As a result, on March 9, oil prices fell 30%, the most significant one-day price drop since 1991. Due to the collapse of international stock exchanges and the sharp drop in the shares of major Russian companies , this day was called “Black Monday”.
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