According to analysts, at the moment, OPEC has lost control over the global black gold market. The era of the cartel is nearing its end, and it can be replaced by three major oil producers, Russia, the USA, and Saudi Arabia.
Experts believe that it is the actions of the leaders of these states (Vladimir Putin, Donald Trump and Saudi Prince Bin Salman) that will determine the dynamics of oil prices in 2019. Their impact on the world market of black gold will be long, although the Saudi prince may be in the minority with the initiative to reduce oil production, analysts emphasize.
Currently, the United States, Russia and Saudi Arabia dominate the market, determining the supply of raw materials. In total, they produce more oil than 15 countries of the cartel. Experts do not exclude that these states may increase production in the next year.
Earlier, in June of this year, Russia and Saudi Arabia initiated the mitigation of the terms of the OPEC + agreement. In the future, countries have achieved impressive production volumes. At the same time, experts recorded a rapid increase in the level of production in shale deposits of the United States. The situation was also influenced by such facts as a decrease in expectations of growth in world demand and the possibility of relief for a number of Iranian oil buyers from Washington. As a result, the mood in the black gold market has changed to less positive, experts say. According to a study by the International Energy Agency (IEA), oil reserves in developed countries of the Organization for Economic Cooperation and Development (OECD), which have fallen since the beginning of last year, are growing again and may exceed the average for the last five years.
The global fall in oil prices forced the leadership of Saudi Arabia to agree to reduce production by 500 thousand barrels per day since December 2018. They recommended other participants in the transaction to reduce oil production by about 1 million barrels per day. The Russian leader was cool about this initiative, and the head of the White House attacked the cartel.
Saudi Arabian authorities may face serious difficulties in relations with the leaders of Russia and the United States. The President of the Russian Federation does not plan to restrict the production of black gold in the country again. At the moment, the budget of Moscow is less dependent on oil prices than during the signing of an agreement to restore the balance in 2016. The Russian leader is satisfied with the price of oil at $ 70. However, the Saudi prince needed a high oil income for the realization of ambitious plans to transform the national economy. According to estimates of the International Monetary Fund (IMF), for a balanced financial budget of Saudi Arabia, the price of oil should be at $ 73.3 in 2019. At the moment, Brent is trading at $ 5 below the stated level.
Confrontation Donald Trump may be much stronger than from other heads of state, analysts say. They find it difficult to predict the further development of the situation. Experts believe that a serious threat to the Saudis' plans is the increase in production at shale deposits in the state of Texas. Over the past year, American oil producers have significantly increased their production volumes. Experts believe that by April next year, production in the United States could reach 12 million barrels per day. This is 1.2 million barrels higher than forecast in January. As a result, the Saudis desire to balance the black gold market in 2019 may run into opposition from the American leader and the indifference of the head of the Russian state, experts believe.
The material has been provided by InstaForex Company - www.instaforex.com