"The event of the week" .. OPEC is confusing the world markets on oil production
Mubasher: OPEC's decision on the oil production cut-off agreement was the most significant event last week, although it did not give a specific figure, but it was below expectations.
Crude markets reacted strongly to the decision throughout the week, both before and after the release of the resolution, which took place in the last days of last week, with the lack of clarity on the actual increase in supplies.
The Organization of the Petroleum Exporting Countries (OPEC) decided on Friday to increase crude output from July with a commitment to its role in stabilizing markets and agreed with Russia and other non-OPEC producers on Saturday to raise production but without explaining the increase in both cases.
The outcome of the 174th meeting resulted in a 14-nation agreement to reduce the rate of agreed production reduction to 100% from 1 July 2018 against the level of commitment of the 14 member states, which reached 152% in May.
The OPEC meeting was postponed last Friday for 30 minutes due to bilateral talks between the Saudi and Iranian oil ministers, according to reports published by Reuters.
OPEC and OPEC producers at the November 30, 2016 meeting agreed to cut output by 1.8 million barrels per day (bpd) starting in January 2017, which will remain in force until the end of June.
The move helped rebalance the crude market over the past 18 months and raised the price of oil to about $ 75 from a low of $ 2016 at $ 27.
The Organization intends to increase production until a review of this situation at its next meeting in the Austrian capital "Vienna" on December 3, as defined by OPEC in its statement on the last meeting last week.
OPEC's decision was a strong catalyst for the crude market, with prices jumping more than 4%, prompting US Nymex to record a weekly gain of 5.7% after Friday's close at $ 68.58 a barrel. Brent crude also rose 3.5% One session.
Moreover, US President Donald Trump continues to interfere in Opec policy, which angered Iran's energy minister, saying: "Oil is not a weapon used by countries against each other."
In conjunction with OPEC's decision, Trump launched a new tweet via Twitter to continue its repeated attack against the organization, causing it to increase oil prices, demanding a real increase in crude production.
"We hope that the Organization of Petroleum Exporting Countries (Opec) will increase its production significantly to maintain the low oil prices," he wrote.
The United States, which competes with Russia and Saudi Arabia, ranks first on the list of the biggest oil producers outside the OPEC race, as it does not participate in the cut-off agreement.
The United States, China and India have been looking at oil producers to produce more to prevent a supply shortfall that would hinder the growth of the global economy.
In statements to Saudi Energy Minister Khalid al-Falih after the meeting, he stressed that producers in OPEC and abroad may pump together about one million barrels per day of oil in the coming months, representing 1% of global supplies.
Saudi Arabia is set to increase its oil production by hundreds of thousands of barrels of oil and specify the size of the increase later, according to "Al-Faleh", quoting the agency "Reuters".
The Saudi Energy Minister hinted that OPEC could hold an extraordinary meeting before its next official talks scheduled for December 3 or amend the agreement in September when monitoring the level of commitment of countries, in the event of an additional drop in global oil supplies because of sanctions against Iran.
The US president announced in early June his withdrawal from the Iranian nuclear deal and signed a memorandum on the re-imposition of economic sanctions on the third largest oil producer in OPEC.
While Russia is heading for an increase of 200,000 barrels per day during the second half of this year, said the country's energy minister, "Alexander Novak."
Novak denied that Trump's tweets were the reason for the increase in supplies, saying: "Our moves are based on deep market analysis."
At the same time, the Iranian Oil Minister "Bijan Zangneh" that the real increase in oil production from OPEC could represent about 500 thousand barrels per day, referring to the failure to allow Saudi Arabia to pump more than half of Venezuelan production, which collapsed in the recent period.
He added that Saudi Arabia could increase its production of oil by less than 100 thousand barrels per day only.
At the same time, Iraq believes that the oil increase may reach 770 thousand barrels per day because many countries suffered from falling production
But shortages of oil supplies from Venezuela, Libya and Angola have cut crude output by 2.8 million barrels per day in recent months.
The world is likely to face an oil shortfall of 1.8 million bpd in the second half of 2018, according to warnings from the Saudi Energy Minister.
Thus, oil production is likely to be lower than the declared goal of the Organization as a result of the difficulties experienced by some oil producing countries such as Venezuela, Libya and Nigeria, with the possibility that Iran will face a shortage of supplies due to US sanctions.
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