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Russia and Saudi Arabia argue on the eve of the OPEC+ meeting

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Russia and Saudi Arabia argue on the eve of the OPEC+ meeting
April 06
09:00 2020

Today began with a decline in the energy market. It was caused by investors’ skepticism about the fact that Saudi Arabia, the United States and the Russian Federation would be able to agree on the cut of the world production by at least 10%.

At 7:15 Moscow time, Brent oil futures have fallen by 2.1% (compared with the close of the previous session) and were trading at $ 33.38 per barrel.

WTI oil futures also became cheaper. At the same time, the drop amounted to 3.4% the asset was trading at $ 27.39 per barrel.

What alerted investors? The fact is that the teleconference of the representatives of OPEC countries to stabilize the oil market was postponed from Monday to Thursday (April 9). It also became known about the argument between Moscow and Riyadh. They tried to find out who was responsible for the collapse of the deal to reduce extraction. The President of the Russian Federation has publicly stated that it was Saudi Arabia that had pulled out of the deal and increased extraction. It was done by offering huge discounts to customers in order to “sink” shale oil production. Representatives of the homeland of Islam said that that assumption was far from the true state of affairs. They also lamented that Russia had got into public arguments instead of compromising.

Both Russia and Saudi Arabia make it clear that they will not cut production without the support of the United States. President Trump says nothing special related to this issue, referring to the laws of the free market.

US officials have hinted that if Russia and Saudi Arabia do not agree, then Washington is ready to impose duties on oil imports. Analysts believe that if the OPEC+ meeting takes place on Thursday, the United States will threaten but not show a desire to compromise.

Meanwhile, oil demand continues to fall sharply. Already, the demand has fallen by a quarter; analysts believe that a decrease can reach 30%. Do not forget that about 70% of the world’s oil storage facilities are full. This fact also has a bearish effect on the energy market.

 

The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company
UFT Group

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