OPEC and its allies were again forced to take new measures\nto avoid a collapse in oil prices.<\/p>\n\n\n\n
It is widely expected that the organization led by Saudi\nArabia and Russia (now called “OPEC+”) will announce in Vienna on\nFriday an agreement to extend production cuts to set a minimum price. But a\nsimple extension of the current OPEC+ cuts may not reduce the looming ocean of\nUS oil expected to arrive next year.<\/p>\n\n\n\n
And if OPEC fails to make these cuts in production, the\nglobal oil market will be supplied with about 800,000 barrels per day during\nthe first half of 2020. This increased supply could spark a major correction in\noil prices, which might lead the Brent crude to drop to $40 for a short period\nof time. It is expected that oil will fall by 30% from its current levels at\n$63 a barrel.<\/p>\n\n\n\n
\u201cThe outlook will be bleak if OPEC+ fails to agree on\nadditional cuts,\u201d said the head of oil market research at Rystad Energy, Bj\u00f8rnar\nTonhaugen. Oil traders expect OPEC + to reach an agreement to extend production\ncuts for at least several months. The current agreement to cut production is\nscheduled to expire next March. Analysts say the market should be prepared for\nsome very downward price moves.<\/p>\n\n\n\n
Oil prices increased yesterday, Wednesday, by more than 3%,\nprovided that OPEC takes the necessary measures that are expected by the\nmarkets. Reuters news agency said that the Iraqi Oil Minister expressed support\nfor the extension of the production agreement until 2020.<\/p>\n\n\n\n
The restrictions imposed by OPEC and Russia have largely\nsucceeded in supporting oil prices, although they remained well below the $70\nlevel that hit markets in October 2018. The problem is that non-OPEC countries,\nled by the United States, continue to increase production.<\/p>\n\n\n\n
Oil production from countries outside OPEC is expected to\nreach a record 2,300,000 bpd in 2020. It is not surprising that the US shale\noil revolution is the largest contributor to the upcoming oil flow. American\nproduction is expected to rise by 1,100,000 barrels per day in 2020, according\nto the Rastad Energy Group. However, it’s not just about US shale oil, but\nNorway and Brazil are also expected to add 1,000,000 barrels per day of oil\nproduction next year, and Canada is preparing for growth as well.<\/p>\n\n\n\n
There is another problem facing OPEC as well, as some of its\nmembers, including Nigeria and Iraq, have not complied with the production\nquotas approved by the organization. Meanwhile, Saudi Arabia, the actual leader\nof OPEC, has borne the brunt of the production cuts. However, there are doubts\nabout whether Saudi Arabia is ready to take greater steps when some of its\nfellow OPEC members pump more than supposed oil.<\/p>\n\n\n\n
Once again, Saudi Arabia cannot allow the collapse in oil\nprices. The kingdom relies on oil revenues to pay off its huge domestic and\nmilitary expenditures. According to the Arab Monetary Fund, Saudi Arabia needs\noil prices of about $84 a barrel. Lower prices would force Saudi Arabia to\ndrain its declining cash balance, borrow money or reduce the profits Aramco\npays.<\/p>\n","protected":false},"excerpt":{"rendered":"
OPEC and its allies were again forced to take new measures to avoid a collapse in oil prices. It is widely expected that the organization led by Saudi Arabia and Russia (now called “OPEC+”) will […]<\/a><\/p>\n<\/div>","protected":false},"author":1,"featured_media":1503,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[40,4],"tags":[93,90,71,74,66,79,42,36,34,145,114,48,24,78,131,41,44,43,72,23,45,109,115],"_links":{"self":[{"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/posts\/1502"}],"collection":[{"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/comments?post=1502"}],"version-history":[{"count":1,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/posts\/1502\/revisions"}],"predecessor-version":[{"id":1504,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/posts\/1502\/revisions\/1504"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/media\/1503"}],"wp:attachment":[{"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/media?parent=1502"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/categories?post=1502"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/skyeconomynews.com\/wp-json\/wp\/v2\/tags?post=1502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}