So, the most anticipated event of the month has taken place. The meeting of the OPEC+ countries lasted 11 hours. As the result of the negotiations, the cartel members have expressed the willingness to reduce total oil production by 10 million barrels per day until the end of June.
From the early July until the end of the year, the restriction for the black gold production will be 8 million bpd, after that (till the end of April next year) the adjustment will total 6 million bpd.
However, it’s too early to wait for the simultaneous reduction of oil extraction all over the world. All the agreements reached will come into force if Mexico agrees. It became known that the Minister of Energy of the Latin American country had strongly criticized the agreement and left the meeting.
If Mexico agrees, then Russia and Saudi Arabia will have to cut the production to 8.5 million bpd in the next few months. From July to the end of the year, the Russian Federation and the United States will be able to produce 8.99 million b/d, and then (until the end of the new agreement) – 9.495 million b/d.
So, the decision signed today by everyone except Mexico will be legitimate until the end of April 2022. The possibility of its extension will be the subject of discussion at the end of next year.
OPEC+ countries have called on large oil producers not to restrict themselves to the established limits but to further reduce production. It is assumed that the cumulative effect of this measure will be equal to 5 million bpd of additional reduction.
Next time, the cartel members will gather on10, June in a teleconference format. They are going to discuss the ways of development additional measures to stabilize the energy market.
The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group