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To the barrel!
The Wall Street Journal was the first to report on the possibility of increasing the reduction in oil production due to low demand, citing sources in OPEC. The Ministry of Energy of Russia is not yet ready to comment on the topic, but earlier the head of the department, Alexander Novak, said that in order to make a final decision, it would be necessary to look at how the situation on the oil market would develop during November.
The restraint of OPEC + participants can be easily explained - jumps in barrel quotes could have been smoothed out by early statements, for example, about the extension of the current conditions for a reduction of 7.7 million barrels per day for three months in 2021, but in addition to the pandemic, the market is destabilized by the uncertainty with the US elections, which by the end of November will be withdrawn. By this time, it will also be better seen to what volumes production in Libya will grow, already amounting to 800 thousand barrels per day. In fact, by December, only the coronavirus will remain unpredictable for the oil market - the enemy is already old, although no less dangerous from this. Then it will be possible to play the trump cards.
"At the moment, it is difficult to predict the scale and duration of the second wave unambiguously, but the quarantine measures already being taken in a number of the world's largest economies allow us to draw a conclusion about the expected slowdown in economic activity and, as a result, a possible reduction in demand for oil and oil products," says the director of the department Consulting Deloitte CIS Pavel Evteev. In response, the participants in the OPEC + deal will have to look for mechanisms to achieve an optimal balance of supply and demand - at least keeping quotas at the current level, I do not exclude that the existing plan will be revised, and the reduction quota may be increased from January 1, 2021, he said. ...
The simplest solution is not to reduce production cuts from January 2021. But if the demand for oil begins to fall from today's values, then a return to the maximum reduction level of 9.7 million barrels is possible.