OPEC trying to prevent further oil price decline

OPEC trying to prevent further oil price decline

Baku, Azerbaijan, Feb. 1

By Anakhanum Khidayatova - Trend:

OPEC's meeting with other oil producers will unlikely to lead to any positive results, says Nadana Fridrikhson, political analyst, journalist and expert of the 'Cube' analytical center.

She said that Russia has repeatedly stated that it is technologically difficult for it to reduce the oil production volumes.

"Saudi Arabia is not ready to ease up either," she said. "Moreover, Venezuelan oil minister Eulogio Del Pino is trying to negotiate with oil producing countries. Eulogio Del Pino's tour to Russia, Qatar, Saudi Arabia, Iraq, etc. has been planned."
"However, even in case of success, oil prices will not reach $100 per barrel or more as in pre-crisis period following all these attempts," she said. "The era of petrodollars will not occur again."

She said that at present, there is a more urgent question, namely, how to prevent a larger decline in oil prices. The recent initiatives have been rather dictated by this circumstance.

She said that it will be hard for the countries which have not reformed their economy and which are dependent on oil revenues. The growing economic crisis, social protests will become an integral part of the oil crisis.
The expert said that the cause is not only in excess of supply, but a crisis of demand. The global crisis, the sanctions greatly affected the Russian economy. As a result, the purchasing power of people reduced.
The expert said that the economy of the post-Soviet countries began collapsing following Russia.

"The economic crisis has affected the EU," she said. "All these circumstances reduced the oil demand naturally. Moreover, the sanctions have been lifted from Iran. The market is preparing for a new player's joining and new oil volumes."

The expert is skeptical about the improvement of the situation on the oil market.
"It is a kind of a vicious circle," she said. "Unfortunately, this is the period of not only economic changes for many countries, but, apparently, political changes, pushed by the growth of social problems."

As of February 1 morning, Brent futures price (March) reached $35.01, WTI - $30.41 per barrel. According to the EIA, Brent average spot price on FOB terms has amounted to $30.36 per barrel since early January. The maximal Brent price amounting $36.28 in 2016 was observed on January 4 and the minimal price - $25.99 per barrel - January 20. Over the past 30 years, the maximum Brent price reached $143.95 per barrel, which was observed in July 2008.

According to the analysts, OPEC oil production will amount to 31.978 mbd in 2016 and 32.152 mbd in 2017.

According to the US Energy Information Administration (EIA), as of 2015 oil supplies by OPEC countries amounted to 31.65 mbd.

Oil supplies by Saudi Arabia, the largest oil producer and exporter in OPEC, amounted to 10.02 mbd in 2015. According to the EIA, Iran supplied 2.8 million barrels per day, Iraq - 4.08 million barrels per day.

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