According to energy experts, the agreement that was made to reduce 10 million barrels per day needs to further deepen the reduction, especially as the indicators confirm a 30% decline in demand, and that the initial reduction included only 10%, which explains the decline in oil prices.
On the importance of agreement to reduce 10 million barrels per day, Dr. Mohamed Al-Sabban, the international oil consultant, said that the recent agreement of OPEC ++ countries to reduce production represented great importance, even if it did not meet the full required reduction, but it prevented the deterioration of prices of less than 20 Dollars.
“The Russian-Saudi step on consensus on reducing production represented the beginning of rebalancing and stabilizing prices,” Al-Sabban explained in his speech to “Sputnik, That “the Russian-Saudi agreement came in a timely manner and prevented the deterioration of prices for less than $ 20, and that joining members from outside”OPEC +“It gave support and strength to the agreement and contributed to the further deepening of production cuts.”
With regard to the question about the possibility of contributing to the reduction of 10 million barrels in stabilizing prices, Al-Sabban sees that
“The United States of America, Canada, Brazil, and Norway should pledge to reduce a percentage similar to that adopted by the OPEC + coalition, especially since 10 million barrels per day is not sufficient to bring about the required balance, and adding another 5 million barrels per day will lead to some balance.”
Regarding the level of prices in the coming period, Al-Sabban said, “It stabilizes above $ 30 during the next three months, and that depends on the extent of the spread of the Corona virus and the opening of doors again to the global economy.”
He pointed out that “global indicators indicate that global demand decreased by 30% of the volume of global demand before the Corona crisis, and it significantly affects prices, as this requires permanent follow-up to the volume of demand, the volume of production and the balance of markets based on developments.”
In the same context, Rabie Yaghi, the Lebanese oil expert, said that “the oil consumption before the Corona crisis was 100 million barrels, while at the moment it is about 70 million barrels, while the reduction included 10 million barrels as a first stage.”
He added in his speech to “SputnikThat current production is estimated at about 20 million barrels per day, and that this quantity should be reduced over the coming period, especially as maintaining prices requires a demand-balance of supply and demand, which means that production must be controlled at the level of market demand, especially in light of Possibility of declining demand. “
In the context of dealing with the “OPEC + Agreement,” the African Organization of Petroleum Producers (APPO) announced on Saturday its decision to support the efforts of “OPEC +” to achieve stability in the global oil market by reducing its production, and added that it will inform OPEC in the near future of the details of a plan Reduction.
And the official account of “OPEC” on Twitter posted a statement saying: “In a spirit of cooperation and collective responsibility … APPO members have also committed to contribute to global efforts to stabilize the oil market by reducing their daily production, and the organization will be informed.” OPEC “details of this reduction as soon as possible.”
The OPEC + closing statement on the last session, on April 9, stated that Russia and Saudi Arabia are obligated to produce no more than 8.5 million barrels of oil per day in May and June, according to the new OPEC + agreement.
According to the statement, the OPEC + countries agreed to cut production in three stages from the production level in October 2018, which means that the level from which oil production is reduced to all countries is the level of each country’s production in October 2018.
As for the levels that Russia and Saudi Arabia start from, they are fixed, which is 11 million barrels per day per country, and will be reduced to 8.5 million barrels in the first two months of the deal.
The statement pointed out that all of this was approved by the “OPEC” countries and countries outside the organization participating in the declaration of cooperation Except Mexico, And can only be executed with its consent.