BAKU, Azerbaijan, March 12
By Leman Zeynalova – Trend:
Any future deal of OPEC+ would be under a completely different structure, and begin with just Russia and Saudi Arabia, Director of SBI Markets, an international commodity trading and advisory company, told Trend.
Barden believes that the current deal, which is to expire at the end of March this year, is already dead.
“Russia is squarely aiming their guns at the US shale oil market. Russia has been watching as they make production cuts and having some of their wells sitting idle, while US shale producers go and fill the gaps. This is all about killing the US shale market and bankrupting those companies, which are all funded on junk bond debt. The effect of this will certainly flow through into the bond markets and create havoc on top of the already fragile market,” he added.
As for the oil prices, Barden expects them to go lower. “There are many factors at play concurrently in markets at the moment. $20 low would be a good result in my view.”
Barden noted that the current low oil prices can stay in place at least for the near future.
“This is not a problem for Russia, it is a strategic move. Saudi is also likely to come under enormous pressure, further strengthening Russia’s bargaining power with them.”
The 178th (Extraordinary) Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC), held in Vienna, Austria, on 5 March 2020, decided to recommend to the 8th OPEC and non-OPEC Ministerial Meeting to extend the adjustment levels agreed at the 177th Meeting of the Conference and the 7th OPEC and non-OPEC Ministerial Meeting for the remainder of the year. It also agreed to recommend to the 8th OPEC and non-OPEC Ministerial Meeting a further adjustment of 1.5 mb/d until 30 June 2020 to be applied pro-rata between OPEC (1.0 mb/d) and non-OPEC producing countries (0.5 mb/d) participating in the Declaration of Cooperation.
However, during the meeting held March 6, OPEC+ failed to reach any agreement on extension of the deal or deepening the cuts further, which led to a significant decline in oil prices.
---
Follow the author on Twitter: @Lyaman_Zeyn