Russian Expert: New deal of OPEC+ to increase oil price, to be beneficial for Azerbaijan
BAKU, Azerbaijan, April 5
By Huseyn Safarov – Trend:
The new deal of OPEC+ will increase oil prices, which, in particular, is important for the influx of new investments in energy projects of Azerbaijan, analyst at the Russian National Energy Security Fund, expert at the Financial University under the Government of the Russian Federation, Igor Yushkov told Trend, commenting on the upcoming meeting of OPEC+ countries.
The meeting will be held in the format of video conference on April 9.
“The new deal will increase the price of oil of the producing countries, including Azerbaijan, which is important for the influx of new investments in energy projects. In the current conditions of low prices, investors around the world have reduced investment in projects,” the analyst noted.
The expert believes that the return to negotiations is a positive fact, since this means freezing of plans on increasing production in the current absence of production quotas.
Indeed, earlier the plans of Saudi Arabia to increase production by 3 million barrels per day led to a collapse in prices, said the analyst.
“At the upcoming meeting, the parties should agree on quotas for the second quarter - 10 million barrels per day. It is a very large amount of reduction. The parties can agree on such a volume only if Saudi Arabia assumes more than half of it,” the expert stressed.
“It will be difficult for Russia to assume commitments on reducing production by more than 0.5 million barrels per day. At the same time, Russia is hinting that if low prices harm all producers, then everyone, including the US, should participate in the reduction,” the analyst emphasized.
“A positive scenario would be concluding an agreement on non-increasing oil production in the second quarter compared to the level of the first. And for the second quarter, it would be possible to really estimate the volume of reduction that needs to be done in order to balance the market, since by that time at least part of demand will recover. China is already reaching normal oil consumption, as it cancels quarantine measures,” Yushkov added.
Earlier, OPEC countries recommended an additional reduction in oil production by 1.5 million barrels per day until the end of 2020. However, at the March 6 meeting, the OPEC+ countries failed to agree on either an additional reduction or extension of the deal under current conditions.