Major oil-producing countries meet to extend production reduction and discuss expansion

Major oil-producing countries meet to discuss reduction extension and scale expansion on December 5 at 9:57

Major oil-producing countries such as Saudi Arabia will hold a meeting to decide future production plans from the 5th, and will discuss the deadline and expansion of production scale until March next year in order to maintain international crude oil prices.

The OPEC = Oil Exporting Countries Organization, including Saudi Arabia, and other non-affiliated oil producing countries, such as Russia, will meet in Vienna, Austria from the 5th to discuss future production plans.

Many oil-producing countries have agreed to continue to cut production until March next year in order to maintain international oil prices because revenues depend on income from crude oil.

At this meeting, we expect to discuss the prolongation of production cuts and the expansion of the scale because the sluggish demand for crude oil will continue next year due to the global economic slowdown. In the background, there is a sense of caution that crude oil prices will drop as production continues to expand in the United States, which has not joined the framework such as OPEC.

In the meantime, against the backdrop of the conflict between the United States and Iran, oil attacks in Saudi Arabia and tankers in the vicinity of the Holmes Strait have continued to raise concerns about the procurement of crude oil. did. The trend of crude oil prices has an impact on the prices of gasoline and kerosene in Japan, and the Japanese government and companies are closely watching the decisions of oil-producing countries.

Crude oil price trends

Major oil-producing countries such as Saudi Arabia and other member countries of the OPEC = Oil Exporting Countries Organization and non-member Russia have aimed to maintain high crude oil prices and have been reducing production to the limit.

The current reduction target is 1.2 million barrels per day, which is more than 1% of the global supply, and we have agreed to continue this policy in July until next March.

However, as of the end of November, the international crude oil prices are as follows: WTI futures price in the New York crude oil market is mid- $ 50, while the future price of North Sea crude oil in the London crude oil market is mid- $ 60. The level of prices expected by oil-producing countries such as Saudi Arabia that depend on crude oil production for finance is not reached.

There was also a phase where the crude oil price recorded a sharp rise. In September, the Saudi oil facility was attacked, resulting in a 15% increase in the New York market and a 19% increase in the London market. Nonetheless, Saudi Arabia announced that supply had recovered, and the price gradually declined, and after about half a month it was almost at the pre-attack level.

In addition to the slowdown in the global economy caused by trade friction between the United States and China, demand has been sluggish, and production in the United States has increased.

Although the United States has developed the shale oil and became the world's largest oil producing country, it has not yet joined the production cut. In September, the export volume of crude oil and petroleum products exceeded the import volume, and this is the first time in 70 years. It has increased its presence in the market, such as becoming a “net exporter”.

On the other hand, Saudi Arabia, who leads OPEC, wants to maintain its presence in the crude oil market by further extending the contract to cut production until the next March through this series of meetings.

Analyst “Extending the Production Reduction Consciousness”

Robin Mills, an analyst who is familiar with the situation in oil-producing countries, said about the outlook for crude oil demand and supply next year. In addition to the United States, production is expected to expand in Brazil, etc. OPEC and others will have to extend the agreement to cut production in order to balance supply and demand. ”

In addition, Mr. Mills said about the trend of crude oil prices: “While many new supplies are expected, demand growth is not large, and there is a tendency for downward pressure to continue. If there is a serious geopolitical problem like this, the price may rise, "he said, and closely watched the conflict between U.S. and Iran around the Persian Gulf where oil-producing countries are concentrated. I need it.