More and more countries want to cut production. What’s next? – Economy News

Print Oman has said it is ready after OPEC to join the agreement to reduce production volumes, as reported by the local newspaper “al-Iqtisadiya” with reference to the Minister of oil and gas of the country Mohammed bin Hamad ar-Rumhi. Thus, wishing to reduce production becomes more and more. Though not yet reported, as far as Oman is ready to cut production, a decision will be taken after consultations with OPEC. Meeting of the countries of the cartel with countries that are not members of OPEC, scheduled for December 10. To be held in Moscow, Vienna or Doha, the exact location is not yet defined.

Recall that November 30, at the summit of the OPEC made a historic decision: the members of the cartel for the first time since 2008, agreed to production cuts to stabilize oil prices. From 1 January production is expected to decline by more than a million barrels per day to 32.5 million barrels per day. This agreement needs to join other countries, primarily Russia. From our country expect reduction of volumes of extraction by 300 thousand barrels per day. All in all, from countries outside the cartel, demand to cut production by 600 thousand barrels.

the Agreement is for six months but may be extended. Vice-President of LUKOIL Leonid Fedun said that the extension would be appropriate, and this discussion will be held in may next year. By the way, the oil Minister of Oman holds a similar point of view. Here’s what he said:

“I believe that the reduction of oil production — the only way out of a situation in which the market is currently overloaded. In addition, it is not enough to cut 1.2 million barrels a day, but I think we are moving in the right direction.”

market Reaction to the statement of Oman followed. Today, the futures black gold fall by about 0.5%. But it is rather just a technical correction after a fantastic growth last week when just three days a barrel of Brent oil rose by 17%.

Note that a portion of the profits from rising prices of oil will go to the budget of Russia. By the way, for us the rise in oil prices may be a plus in another area: can and the price of gas to get up to 15-20%, because they are still determined by the formula from prices of petroleum products with a lag of 6-9 months. But whether it will save us from the fiscal deficit depends on price stability “above 50″. To understand this, consider how OPEC worked, and what has happened to prices since 2008

But, how to talk about the impact of OPEC on the oil market Alexey Golubovich and Alexander Orlov from “Arbat the capital”:

background

once, in the 70-ies of the last century, OPEC really has managed if not to provoke, at least to exacerbate the global economic crisis. OPEC now controls only 34% of world oil production that does not allow it to control prices. And therefore, any decline in production in OPEC immediately and without any tension covered by other exporters and the appearance on the market of shale oil and not made any attempt to limit the production is absolutely useless: if gold is $ 50 it can be extracted almost in your backyard. C spring 2015 each increase in oil prices above $ 50 led to increased hedging from producers of shale oil is now the oil companies have hedge nearly 2 billion barrels.

the oil Market – the speculative and large in volume among commodity markets in the world, that is the price it is not so much the balance of supply and demand, and the availability and cost of liquidity, political events (not only in the middle East, but in Venezuela, the former USSR, etc.), expectations of investment managers and service their traders people with several tens of billions of (other people’s) of dollars in futures contracts. The latter generally don’t care where rising or falling price of oil, because it is important to guess the direction, and for this they need an “event” (rumors about the agreements, interpretation of statistics and political statements, etc.).