On Monday, September 9, world oil prices are rising steadily. Energy sources of the reference brand Brent rose by almost 0.8% and for the first time since the beginning of August, it has been trading above $ 62 per barrel. This is evidenced by the ICE exchange in London.
Quotation growth is taking place ahead of the OPEC + monitoring committee meeting. On September 12, in Abu Dhabi, participants in a deal to freeze oil production will discuss the results of the treaty and review the forecast for 2020. On Monday, September 9, said OPEC Secretary General Mohammed Barkindo in the fields of the World Petroleum Congress, reports TASS.
In anticipation of the meeting, the markets are counting on a further reduction in the production of raw materials by hydrocarbon exporting states. Thus, oil prices reflect a positive attitude of investors. About this in an interview with RT said the head of the analytical department of AMarkets Artyom Deev.
“According to analytical agencies, as part of the deal, the state is cutting production 10–20% ahead of schedule, which is clearly affecting the market. The fact that the OPEC and OPEC + countries intend to continue cooperation to reduce production volumes gives an optimistic signal for rising world prices, ”said Deev.
Recall, in order to balance the global energy market of the country, the OPEC + member countries will reduce oil production by 1.2 million barrels per day from the level of October 2018 from January 1.
According to the agreements reached, the OPEC states participating in the deal should reduce oil production from 26.75 million to 25.94 million barrels per day. As follows from the organization’s latest report, in July, cartel countries exceeded the terms of the agreement and produced 25.57 million barrels per day.
Note that the OPEC + transaction is valid until the end of March 2020. At the same time, some of the participants in the pact have already agreed on an indefinite partnership in the framework of the agreement. This statement was made by Mohammed Barkindo.
“Ratification is an individual process for each country. But some countries have already passed it. Oman, Iraq, for example, reported that their parliaments had already ratified the charter (on indefinite cooperation. - RT ), ”the OPEC Secretary General quotes TASS.
According to Artyom Deyev, news on a perpetual contract additionally supports oil quotes. Thus, investors are more and more confident in continuing OPEC +’s policy to reduce production.
Royal castling
Experts interviewed RT also linked the rise in oil prices with political shifts in Saudi Arabia. After three years of work, Khaled al-Faleh resigned as head of the country's energy minister. The new leader is the son of the king - Prince Abdel-Aziz bin Salman Al Saud.
Investors welcomed the news of the change of minister and are now waiting for an even greater decline in oil production in the kingdom. As a result, energy resources in the world began to rise in price. This was in an interview with RT the director of the Academy of Finance and Investment Management Arseniy Dadashev.
“For the first time, a member of the royal family became the Minister of Energy. As expected, the son of the monarch will strengthen measures to reduce the supply of raw materials in the market. Apparently, his predecessor, and concurrently the chief architect of the OPEC + deal, did not achieve the required goals and was unable to keep prices high before entering the Saudi Aramco oil state corporation’s stock exchange, ”Dadashev explained.
The initial public offering (IPO) of Saudi Aramco is scheduled for 2020. Initially, the company's listing on the stock exchange was to be the largest in history. So, in October 2018, the Saudi authorities estimated the value of the corporation at $ 2 trillion and planned to sell 5% of the securities. However, since then a barrel of oil has fallen in price by almost $ 20. According to Arseniy Dadashev, as a result, the chances of a successful fundraising began to decline.
According to the expert, Abdel-Aziz bin Salman can voice the updated action plan for oil production on September 12 at a meeting in Abu Dhabi. At the same time, the appointment of a new Minister of Energy will not affect Saudi Arabia’s policy regarding OPEC +. This point of view was expressed by Mohammed Barkindo, TASS reported.
Moreover, the resignation of Khaled al-Faleh will not affect the relations of Riyadh with Moscow. This was announced on Monday by the press secretary of the President of Russia Dmitry Peskov.
“The departure of an individual minister is unlikely to affect the general political will of Moscow and Riyadh on the continuation and further development of multifaceted partnerships and mutually beneficial relations. These relations will continue, including in the field of cooperation in international energy markets, ”RIA Novosti quotes Peskov.
Price bar
World oil prices are also supported by a slight weakening of the US-China trade war. As Artyom Deyev explained, Washington’s and Beijing’s readiness for negotiations signals investors the possibility of ending the conflict in the near future. It is expected that such a development of events will increase the demand for oil and lead to a rise in the cost of raw materials.
According to Arseniy Dadashev, in the coming months, the US-Chinese negotiations will significantly affect the cost of hydrocarbons.
Meanwhile, it is the decisions of the countries participating in the OPEC + transaction that will become decisive for quotes. As Peter Pushkaryov, chief analyst of TeleTrade Group of Companies, explained in an interview with RT, that due to the fulfillment of the contract in the fall, a Brent barrel could rise in price up to $ 65-66.
“All that is now required from the OPEC + monitoring committee is not to frighten the mood of market participants. The members of the agreement must confirm the overfulfillment of plans to reduce production or even declare their readiness to tighten even more tightly in terms of volume, if necessary to stabilize the market, ”Pushkaryov concluded.