Oil price will rise if OPEC+ will cut production

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The market sentiment is pessimistic because of rising oil demand and increasing crude oil production in the United States. In this regard, Saudi Arabia should take steps to support prices at least $60 per barrel.
Obviously, it will not be easy. Yesterday entered into force the announced tariffs on imported Chinese products. A new round of escalation of the trade war intensified concerns that global growth is slowing.
And it primarily had a negative impact on demand. Despite the decline in supplies from Iran and Venezuela, OPEC countries will have in total to cut production to at least 2 million barrels a day to prices not only kept on the level $60 per barrel, but were trading within the stated break-even price for Saudi Arabia is about $80 per barrel.
Will Russia support a new reduction of oil production is difficult to answer. After all, our country’s participation cannot be taken for granted, as Russian companies face difficulties due to the reduction of production. But given that Russia is also interested in high oil prices, most likely, it will continue cooperation with OPEC.
Major market participants expect the meeting of the Ministerial monitoring Committee of OPEC, which is scheduled for 12 February in Abu Dhabi. This meeting will analyze the situation on the global oil market, and the strategies in place to stabilize the market.
Fundamental factors of the oil market can be regarded as positive due to the reduction of strategic reserves of oil.
The high volatility of the market creates a speculative transaction, reacting to geopolitical news. In the medium term, the oil market will depend on the strategies that will be developed and used by OPEC in the upcoming meeting. Quota revision in the direction of greater reduction of oil production.
Therefore, until the end of this month prices will depend on the outcome of meetings of OPEC in Abu Dhabi. The purpose of this event is to keep prices above $60 per barrel. If OPEC decide to cut production by another 1 million barrels per day by the end of the month, Brent will cost $65 per barrel taking into account the geopolitical factors related to trade wars. While WTI oil may rise to $58 per barrel.
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Gaidar Hasanov
Expert
“International financial center”