January 23, 2022

OPEC and its partners to host an emergency virtual meeting

Energy Secretary on key OPEC+ meeting and possible production cuts

OPEC and its partners to host an emergency virtual meetingOPEC and its partners to host an emergency virtual meeting

The OPEC Oil Producers Group and its partners will hold an emergency online meeting on Monday, where all members of the energy alliance are to participate in order to work out a solution to stabilize markets.

It comes less than 24 hours after President Donald Trump told CNBC that he expects OPEC leader Saudi Arabia and non-OPEC Russia to squeeze up to 15 million barrels of oil off the market..

On Friday morning, the international benchmark Brent crude was trading at $ 32.78 a barrel, up more than 9%, while the US WTI price was $ 26.59, up over 5%..

Brent went up on Thursday more than 21%, marking its best day since 1989, while WTI closed more than 24% higher, also posting its best daily rally ever. At the same time, since the beginning of the year, Brent and WTI have still fallen in price by more than 54%.

Azerbaijan’s Energy Ministry said Friday that a virtual meeting of OPEC producers and non-OPEC partners is scheduled for April 6 – an alliance sometimes called OPEC. +.

OPEC did not provide CNBC with operational comments Friday morning.

Trump tweeted Thursday that he expects OPEC + to cut production by about 10 million barrels of oil..

About 30 minutes after his first tweet, Trump then suggested that the deal «may reach 15 million barrels». It would be «great news for everyone!», he added.

Oil production is usually discussed in terms of barrels per day, but Trump did not mention the timing of the cuts. In addition, it is not yet clear how the cut in production in oil-producing countries will be distributed..

«Donald Trump‘s tweet… This is actually nonsense», – said Patrick Armstrong, chief investment officer at Plurimi Investment Managers, on Friday in an interview with CNBC.

«In no case are Russia and Saudi Arabia going to cut production by 50%, which is an average of between 10 and 15 million barrels per day, which he talked about.», – added expert.

The U.S. President tweeted on Thursday that he spoke to «my friend», Crown Prince of Saudi Arabia, Mohammed bin Salman, who, in turn, spoke with Russian President Vladimir Putin. Trump hopes both heads of state will ensure production cuts.

Putin’s press secretary Dmitry Peskov told the agency «Interfax» Thursday that the Russian leader did not speak to his Saudi counterpart, as Trump claimed.

«Maybe he spoke to them, maybe there’s a deal, suggests Armstrong of Plurimi Investment Managers. – I think the market reacted to the tweet as if we saw 15 million barrels a day leaving the market, and this will not happen».

Analysts told CNBC that in order for OPEC + to agree to a significant production cut, the US will likely have to give up something in return..

Timothy Ash, senior emerging markets strategist at Bluebay Asset Management, believes the oil deal will not be struck if Putin «will not get exactly what he wants».

What the Russian leader wants from the US, Ash believes, «they are firm guarantees that the sanctions will be lifted. He also wants Trump to return him to the team of world leaders – the G8, or even better G2 / 3.”.

The coronavirus pandemic has forced countries around the world to virtually shut down, with many governments introducing harsh measures affecting the daily lives of hundreds of millions of people.

The restrictions created an unprecedented demand shock in energy markets, and a price war broke out between oil producers – Saudi Arabia and Russia.

Saudi Arabia recommended last month to cut production by 1.5 million barrels per day as oil demand slumped amid coronavirus outbreak.

However, on March 31, Moscow rejected the offer, thereby ending a three-year production cut pact..

«Simply put, there is skepticism that both sides will come to a truce», – says Stephen Brennock, oil analyst at PVM Oil Associates.

«Also, keep in mind that the huge supply cuts mentioned by Donald Trump are still sorely out of sync with eliminating excess supply.», – he added.