Russia Suggests New Extended Opec Deal

Russia Suggests New Extended Opec Deal

Kirill Dmitriev, head of RDIF, Russia’s sovereign wealth fund, said that a new OPEC deal might be possible if other countries join in. The states should also contribute to cushioning the economic fallout from the deadly virus. 

Dmitriev stated that joint actions by the countries are necessary to restore the world economy. Collective efforts are also possible in OPEC+ agreement’s framework. Oil Prices Dominate on U.S.-China Trade Optimism; Demand Concerns Beat - MyForexNews

The existing deal with OPEC expires on March 31. Dmitriev said that they are in contact with Saudi Arabia and several other countries. Based on these contacts, if the number of OPEC+ members increases and other countries will join, there is a chance of a joint agreement to balance oil markets, declared the head of RDIF.

Last week, Trump made a statement that he would get involved in the oil price war at the appropriate time. 

Dmitriev stated that a global economic crisis was inevitable. The virus just triggered it. He mentioned that it’s essential to restore relations between Russia and the US. RDIF has produced 500 000 coronavirus test kits and is planning to increase production to 2.5 million kits a week.

 

Putin hoped Russia would defeat coronavirus in two to three months, as the total number of infected Russians totaled 1,000, with four virus-related deaths. Dmitriev believes in following the examples of Hong Kong and South Korea. The countries have shown how testing can limit the Coronavirus spread. 

The agreement between OPEC and Russia fell apart earlier this month, leading to the oil price war

 

It came as a surprise that the Coronavirus outbreak had severely affected oil demand. The pandemic caused the fall in factory output and transportation demand. In consequence, oil prices fell. Brent crude experienced the most significant drop since the Gulf war, with the rates tumbling by 30%. 

OPEC and its independent Russian-led allies (known as OPEC+) agreed to cut oil production by about 1.5 mln barrels a day through the second quarter of the year to balance the market. Similarly, Saudi Arabia, as the largest producer of OPEC oil, encouraged other members to decrease it. Reducing the additional 6,000 barrels to a total of 3.5 million barrels. At that time, all members agreed to review the policy in March to determine whether or not the agreement would resume.

The meeting ended with a disagreement between the two sides. Russia rejected the demand. And suggested that the agreement be extended until June. After the meeting, the Russian energy minister said that from April 1, any government could produce any amount of oil it wanted. It caused the oil prices to fall 10%.

As a result, Saudi Arabia has taken steps to increase its market share by increasing its reserves to historical levels and saturating the market with its oil. Besides, oil prices have fallen to their lowest levels in the past five years. 

In February, the Trump administration put sanctions on Russia’s biggest oil company Rosneft. According to some media outlets, Russia may have seen the oil war as a way to get revenge against the US sanctions. 

 

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