Opec +, also the deputy prime minister of Russia in Vienna. Towards a cut of 1.5 million barrels per day
There is great anticipation for the first meeting in the presence of OPEC + since the outbreak of the pandemic which will be held on the afternoon of Wednesday 5 October. Delegates from all members of the Organization of Petroleum Exporting Countries and from allied states are catching up Viennaincluding, according to CNBC, the former energy minister and current Russian deputy prime minister as well as the Kremlin’s highest ranking official to visit Europe since Putin started his war, Alexander Novak.
Rumors are rising in support of a 1.5 million barrels per day cut
The most accredited hypothesis, and the one expected by the markets, is of a cut crude oil production by about 1.5 million barrels per day. Russia And Saudi Arabia, members of the enlarged cartel, are the main supporters of the move to prevent a further drop in oil prices. An output reduction of this magnitude, deeper than initially discussed, would be the most consistent since the outbreak of Covid-19 to address the market procedure.
For the economists of Unicredit research the fork is wider: the production cut will be at least one million and perhaps up to 2 barrels per day. Even according to the agency Bloomberg the could discuss a reduction in the production limit of 2 million, as well as lower cuts in the range of 1 to 1.5 million barrels per day. The analysts of Spi Asset Management they believe that Novak’s presence is a sign that the Cartel is preparing for a significant unit of production and is showing.
Experts are more cautious Exinity Group that there is a cut of between 50,000 and 1.5 million barrels per day: “OPEC + must be convincing the desire to drive prices to fundamentals to offer significant support to oil benchmarks amid the wave of tightening of the destructive policies of demand by central banks around the world “, they affirm.
But the actual cut would be less
However, due to the low respect of the others, it is likely that the actual drop in the current production of the is, they point out, is less than the amount of the cut. Come explain Cnbc, a reduction of one million barrels a day would probably mean about 500,000 barrels a day less on the market, but according to some this would be enough to bring oil prices back to around $ 100. Others believe today’s decision could set crude oil futures low at $ 90.
Someone could oppose the reduction
Instead, the United Arab Emirates and the Kuwait, Persian Gulf greats that producers hold long-term delegates to damage their production capacity plans, which are involved in their production capacity plans. The UAE, in particular, has invested billions of dollars in recent years to expand its manufacturing capacity.
But Russia may not be willing to change positions. With much of the West having decided to give up its oil, Moscow has shrunk Willy-nilly the production of about 1 million barrels per day, equivalent to nearly 10% of its peak production, and faces further uncertainty in the near term when an EU oil embargo and price-cap regime comes into effect on 5 December. As a demonstration of the inside, OPEC + canceled the meeting of its technicians scheduled yesterday, because the delegates, because the disagreements are relevant that only one of the oil ministries can resolve the issue.
Soft oil futures
After exceeding $ 100 a barrel in the first six months of the year due to the Russian invasion of Ukraine, oil prices have fallen 32% in the past four months due to global economic concerns, with European Brent below $ 83 a barrel for the first time since January. In the middle of the European session, Brent was trading slightly down at $ 91.6 a barrel, while the US WTI was down 0.2% to $ 86.4.
Volatile ruble pending OPEC +
Meanwhile, on the currency front there is strong volatility. A few hours after the meeting, the ruble gains against the euro by trading close to 58.6 against the single currency, after a session start in which the Russian currency had lost 2.2% to trade at 57.66 against the euro, the weakest since September 26. In the sessions, the ruble fluctuated significantly, hampered by limited liquidity and investor concerns that any new sanctions on Russia’s shares could limit Moscow’s access to foreign currency. Citing continued market volatility, the Russian Ministry of Finance even canceled the Ofz Treasury bond auctions scheduled for Wednesday 5 September. (All rights reserved)