The Vienna meeting of OPEC member countries and countries outside the cartel. The latter agreed after OPEC cut its prey. This was the first such agreement for the last 15 years.
Russia and other countries outside OPEC, has pledged in total to reduce their oil production at 558 thousand barrels per day from January 2017. This was reported to journalists after the meeting in Vienna the Minister of oil of Iraq Jabbar al-Laibi, according to Bloomberg.
Earlier, Russia said it was ready to reduce its production by 300 thousand barrels. Mexico pledged to cut production by 100 thousand Barr., Azerbaijan — 35 thousand Barr., Oman — on 40 thousand Barr. adds Bloomberg.
From the Russian side the meeting was attended by Minister of energy Alexander Novak. According to him, the agreement on production optimization of oil was signed by 11 countries outside OPEC. “For the first time so many countries taking part in joint actions. Let me remind you that all the OPEC countries and 11 countries outside of OPEC,” he said. Novak added that he has signed in Vienna an agreement will reduce the volatility and accelerate the stabilization of the market and increase the investment attractiveness of the oil market.
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As said Novak, non-OPEC countries will reduce their production under the agreement, c level-October.
At the meeting in Vienna was attended by the representatives of OPEC member countries and countries outside the cartel. According to the Agency, the decision on the reduction of oil production volumes was the first such agreement between the two parties over the past 15 years. Before the meeting, the Minister of energy of Venezuela, Eulochio del Pino said: “We managed to gather 25 countries, both within and outside OPEC, with the idea to stabilize the oil market and to protect a fair price for our goods.”
In late November the decision to reduce their production volumes took the OPEC countries. They agreed to cut production by 1.2 million barrels per day from January 2017.
Press Secretary of “Rosneft” Mikhail Leontyev said that on the basis of agreements and OPEC countries outside of OPEC to reduce oil production early to talk about the technical parameters of the reduction of oil production in Russia. “First, in the first quarter of this reduction is physically impossible due to climatic conditions. Secondly, OPEC countries and others joined the agreement must first prove the ability to fulfill these agreements”, — he said RBC.
“the Agreement at the summit of OPEC — a natural reaction of producers to the situation. LUKOIL supports the position of the Ministry of energy and ready to join the commitments from the Russian side”, — quotes the application of the head of LUKOIL Vagit Alekperov, the press service of the company.
“RussNeft” will obey the orders of the government on the reduction of oil production, if followed, have informed RBC in the press service of the company.
the Representative of “Gazprom” declined to comment.
According to senior analyst of Sberbank CIB Valery Nesterov, following the conclusion of an agreement by OPEC and outside the cartel to reduce output of oil from the market a chance to balance for a few months earlier than it would occur naturally. Following the decision, according to his forecasts, the price of oil could rise to $ 55 per barrel and in case of implementation of the decision will be tightened to $ 60 within a year.
However, the execution of such agreements a lot of questions, he said. In the first quarter of next year the number of countries that joined the agreement, including Russia, can be a process of natural decline in production. If the agreement will be valid for only six months, Russia will be able to win back its prey by its growth since the summer of 2017. It is also unclear whether declining oil exports, as consumption in the country is not growing, even processing falls. In addition, the analyst said that if other parties to the agreements will not perform their for its part, Russia is not going to reduce production.
Deputy Director for investments UK “Univer” Dmitry Alexandrov believes that reaching agreements about the reduction of oil production by countries outside OPEC to help prices for oil on Monday to gain a foothold at $ 54 per barrel and grow with this mark (if you do not consider the effect of adjusting the rate of FRS of USA). But at the start of trading, according to him, may be followed by a small drop in oil prices as a result of the negative factors of the agreement. Because the parties agreed to reduce production not 600 thousand barrels per day as expected, but only 558 thousand, he said. However, the most important for the market factor of stability and predictability, in his opinion, that Russia has reduced the previously stated parameters of its reduction of production of 300 thousand barrels per day.
as to the technical possibility of reducing oil production in Russia, it can be done smoothly by decommissioning unprofitable wells at existing fields, says the analyst.
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