The OPEC + alliance witnessed several challenges during this year, and there were questions about whether the alliance was nearing its end.
In a report published by the US oil price website, writer Hayley Zaremba said that this trade coalition consisting of traditional members of the Organization of the Petroleum Exporting Countries plus Russia was largely responsible for the massive collapse of oil prices at the end of April.
After the Corona pandemic swept across the world, which in turn led to a significant reduction in oil demand, the OPEC Plus alliance meeting turned into a dispute between Russia and Saudi Arabia and later turned into a comprehensive oil price war that caused a huge oil surplus at the global level.
The writer stated that the oil storage deficit caused by this abundance will continue to push the WTI crude index into negative territory, as its value on April 30 reached nearly $ 40 below zero per barrel.
Since then, OPEC Plus countries have joined hands once again to address the oil market crisis, and have made numerous pledges and severely reduced production to support crude oil prices, but many countries have not kept their promises.
The results of the production cut
According to reports by "Markets Insider", OPEC reached a historic agreement to reduce production to the limits of 9.7 million barrels per day in April, but a number of countries have largely failed to achieve production targets.
Iraq - the second largest member of OPEC - pledged this week to commit to reducing its oil production in the coming months, after a conversation that took place on Thursday evening between the Iraqi and Saudi leaderships, Baghdad pledged to reduce oil production by 400 thousand barrels per day in the months of August and September. .
Despite the gradual recovery of the oil market at the present time, and the efforts of countries such as Iraq to abide by their promises, this does not mean the relief of the crisis for the international oil trade coalition. According to the Wall Street Journal this week, the rise in prices Oil reveals cracks in the fragile cooperation between powerful oil-producing nations.
In the beginning, Russia's accession to OPEC Plus was a godsend for the group and a blessing for oil markets, but the stark difference between the ambitions of Riyadh and Moscow could lead to the destruction of this alliance.
The writer indicated that the commitment of many OPEC Plus members to reduce production had positive results, and in mid-July, the alliance actually agreed to allow an increase in total OPEC Plus production by 1.6 million barrels per day, an amendment according to the "Wall Street Journal." Reflects improved demand for oil, however, this growth would impede future opportunities for cooperation between Saudi Arabia and Russia.
History shows that alliances often require a common enemy, and in this case the oil market falters. Regarding this, Gary Ross, CEO of Black Gold Investors, said, “The higher the price of oil, the more difficult it is to push Russia into Continuing to reduce production, especially once Brent crude reaches $ 50 a barrel.
Under these circumstances, it is not possible to prevent a rift between Saudi Arabia and Russia, with the two countries now claiming publicly that parity prices vary widely, and that the recent relaxation of stringent production measures may be a bad omen for the already delicate alliance.
The dramatic failure of OPEC and its perilous trade coalition could lead to serious geopolitical turmoil in the Middle East and the rest of the world.