UNITED STATES (OBSERVATORY) – On Friday, the Ministerial Monitoring Committee will meet in the Saudi city of Jeddah to discuss the OPEC + deal. What decisions can be taken in the light of achieving the objectives?
In addition to the countries that are members of the committee – Russia, Saudi Arabia, Oman, Kuwait, Venezuela, Algeria and the United Arab Emirates – Iraq, Azerbaijan, Kazakhstan, Brunei and Libya can also take part in the meeting. This was reported on the eve of the agency Bloomberg, citing sources.
Recall that the term of the agreement is calculated before the end of 2018, meanwhile, oil prices have already reached their highs since 2014, and some countries from the financial point of view feel much calmer, which may affect their political actions.
The main purpose of the agreement was not only to raise prices, but also to reduce commercial oil reserves in OECD countries to an average level in the last five years. Actually, the decline in inventories has become the driver of the price increase.
Meanwhile, according to the International Energy Agency (IEA), data on reserves for March or April may already be at the level of the average for five years.
Today the statement on this topic was made by the Minister of Energy of Russia Alexander Novak. Russia in April will be 100% enforcement of the quota in the OPEC + deal, he said.
“Now close to 100%, I think that in April we will be 100% going out,” the minister said.
Novak also expects that surplus oil reserves will disappear from the market in the coming months.
The main question is, can any of the key participants exit the deal? And although such a question does not arise, it is really relevant.
If, in the event that oil prices fell to $ 30 per barrel, the deal participants had little to worry about, except for the prices themselves, now everyone feels more or less comfortable and can also engage in geopolitics.
In particular, some of the actions of Saudi Arabia may somewhat cool relations with Russia. Recall that last year the Saudis agreed with the US on investments of $ 200 billion, and in March this Crown Prince Mohamed bin Salman Al Saud went to the US on a three-week tour, where he agreed to increase investments in the US to $ 400 billion.
At the same time, experts note that the main purpose of the visit of the Crown Prince is to enlist the support of the United States on a wide range of issues, first of all, it is about the relationship with Iran and Qatar.
The intensification of cooperation between the United States and Saudi Arabia threatens Russia’s interests, some experts believe.
The day before the meeting of the Crown Prince and Trump in Washington, the American edition of The Hill reported, referring to its sources in the administration of the White House, that the US intends to convince the Crown Prince not to buy weapons from Russia in response to its policy in the Middle East.
As an argument against cooperation with Moscow, her support for the Iranian deal was also cited, reports The Hill. In October of last year, during the first visit of Saudi Arabia’s King Salman bin Abdul Aziz Al Saud to Moscow, Riyadh announced its intention to purchase from Russia S-400 air defense missile systems, Kornet-EM anti-tank missile systems, heavy TOS- 1A “Pinocchio” and grenade launchers AGS-30.
Meanwhile, just a few days ago there were reports that Saudi Arabia had confirmed its readiness to send troops to Syria “together with other countries” in order to stabilize the situation, reports AFP.
“We are in discussions with the US and have been discussing since the beginning of the Syrian crisis in 2011,” Foreign Minister Adel al-Jubair said at a joint news conference with UN Secretary-General Antonio Guterres in Riyadh.
Perhaps such a turn of events may somehow complicate the talks on further cooperation in the framework of OPEC +.
– Background –
Russia in its history has twice withdrawn from the agreement with Saudi Arabia, although both cases were dictated by the consequences of crises. This was in 1998 and in 2007-2008.
By the way, on the eve of the prospects of cooperation in the framework of the agreement, the Minister of Oil of Oman Mohammed Hamad al-Rumhi spoke. The cooperation of the OPEC + countries after 2018 does not necessarily mean continued production cuts, he told reporters on the sidelines of the monitoring committee in Jeddah.
“Continuing our cooperation does not necessarily mean maintaining quotas to reduce production, there are many options for cooperation between OPEC and not OPEC,” he said, responding to a question about whether the issue of extending the deal for 2019 will be discussed on Friday.
The minister also said that OPEC + could “seriously consider raising production if the balance of supply and demand is established in favor of the former.”