Oil: OPEC’s Decision was expected compromisng

  • And
  • +A

OPEC’s decision+ to increase the production expected of a compromise. Not met the initial radicalism of the proposal to increase by 1.5 million barrels a day. And of the accepted 1 million barrels. really production can be raised only on 600 – 700 thousand, subject to the capacity of some participants. But such volumes don’t increase the supply compared with the initial reduction in OPEC+ 1.8 million barrels. Recover only the excess of fall in excess of this value because of the situation with the embargo of Iran and the crisis in Venezuela.
But even this increase will halt new market imbalance, when there is an excess, a shortage of “black gold”.
Accordingly, the likely stabilization of oil prices on the prospect of a few months in the range of $71-79/ bbl. according to Brent.
This situation is quite favorable for Russia and its budget. It is important not only to maintain high oil prices, but also sufficient stability. Rubleva the price of a barrel hanging on an unheard of altitude of more than 4 600 rubles , while the budget is not above 3200 RUB Additional revenues will amount to 1.75 trillion in 2018 , according to amendments to the budget.
The flip side of the deal, OPEC+ Russia stands for the loss of market share, primarily in favor of the United States. Our country from the end of 2016, decreased production by 300 thousand barrels/day to 10.9 million barrels. While us oil companies have increased it to 550 thousand barrel. bringing to 10.73 million barrels. and ahead of Saudi Arabia (9,99 million Barr.).
However, it is true that “of two evils choose the lesser”. The desire to preserve the volume and place in the market would lead to falling prices and the losses would have been much more.
___________
Mark Goykhman,
Senior analyst,
TeleTrade