To counter the collapse in oil prices, the producing countries gathered in theOpec +, starting with the heavyweights Saudi Arabia and Russia, have reached an agreement on the production cuts. The decrease will be equal to 10 million barrels per day in May and June. Remains only Mexico is outside the agreement.
However, the agreement reached is still a declaration of intent rather than a binding agreement. The actual cuts have not yet been signed, but the summit nonetheless achieved the important result of interrupting – at least on paper – the price war between Riyadh and Moscow.
In theory, if everything goes as planned, Saudi Arabia , Russia , according to reports by Bloomberg and Reuters referring to the rumors of some delegates at the exit of Thursday's meeting, they should reduce production by 8,5 million barrels/day each, in May and June, leaving the other OPEC members a cut about 23%. In this way, the cut of 10 million barrels a day in total would be achieved. Another 5 million barrels of cuts would instead be borne by the other producers of the Group of 20, outside OPEC, which meets on Friday afternoon. The president of the United StatesDonald Trump, however, declared that US production has already decreased naturally due to the drop in demand.
The agreement also provides that, from July to December 2020, the cut will fall to 8 million barrels per day, before being further reduced to 6 million barrels per day between January and April 2022.
Meanwhile today, Friday, also taking advantage of the closure of the stock exchanges, an extraordinary meeting will be staged by G20 of Energy Ministers. The goal of the meeting is to facilitate "global dialogue and cooperation", reads the official note. In other words, to convince the Mexicans as well, who however have said they do not want to participate in the meeting and that they are willing to give up only 100.000 barrels a day against the 400.000 that are being asked of them.
The next OPEC+ video conference will be held on 10 June.
Due to the coronavirus pandemic, in recent weeks global fuel demand has plummeted: -30%, equal to about 30 million barrels less per day. And many analysts believe that even the quota of 15 million barrels is insufficient to stabilize market prices.
The uncertainty that arose after the OPEC+ meeting disappointed the market, which evidently expected a more decisive (or more concrete) cut in production. Pricesin fact, they continue to fall: the latest quotation of Brent stands at around 32 dollars a barrel, down 3%, while Wti travels at 23,29 dollars a barrel (-7,1%).
At the same time, stocks are at the maximum, so much so that one is expected saturation of storage capacity world as early as May. A situation that the Saudis take advantage of to go shopping, for example by purchasing Eni shares and some of the main European Majors.
