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Oil price to depend not only on extension of OPEC + deal, but also on its terms — experts

November 28, 21:28 UTC+3 VIENNA

The prolongation of the oil production cut agreement will be discussed on November 30

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© Egor Aleev/TASS

VIENNA, November 28. /TASS/. The outcome of the meeting of oil and energy ministers of the countries participating in the agreement on the reduction of oil production (OPEC +), which will be held on November 30 in Vienna, can push the oil price up to $65 per barrel, according to the experts interviewed by TASS.

Experts agree that the main intrigue of the meeting is not about whether the deal will be extended or not, but changes in the terms of the deal.

The oil production cut agreement expires in March 2018 and its prolongation is regraded quite predictable.

On the eve of the ministers’ meeting, on November 29, a meeting of the ministerial monitoring committee, which comprises representatives of Saudi Arabia, Venezuela, Kuwait, Algeria, Oman and Russia, will be held.

The fate of the deal after March 2018 is the main issue on the agenda of the Vienna meeting. Although practically all the countries of OPEC + have already spoken out for the extension of the production reduction regime, Russia's position remains unclear.

Russia’s Energy Minister Alexander Novak repeatedly stated that the final decision regarding the terms of the deal is possible not earlier than the beginning of the next year. However, last week he confirmed that the Ministry of Energy is ready to discuss the extension of the agreement at a meeting on November 30. At the same time, the parameters and terms have not been determined yet, the minister said.

The analysts interviewed by TASS are confident that the outcome of the meeting is predetermined.

"There is only one intrigue here: will the participants decide on the freeze (of production) right now or to postpone it until March 2009. Nobody expects OPEC + members to declare non-extension of the agreement," Tatyana Mitrova, director of the Skolkovo business school energy center, said.

According to the senior director for corporate finances at Fitch Maxim Edelson, the extension cannot be avoided, since "the oil market in 2018, most likely, will not return to a state of equilibrium."

According to the US Department of Energy, oil reserves of developed countries by the end of 2018 will grow by almost 70 million barrels (or 2%) by September 2017, Edelson says. "So everything says that the OPEC + agreement will most likely be extended, although its parameters can definitely be reviewed," he said.

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