To know if the strategy of OPEC works, will have to wait. This is not the first time that the cartel of oil producers, looking to cut production to boost prices, and the impact is deflated a few weeks later. Sometimes, because after the cut is not as drastic. Further, because the weakness of demand (and supply from other markets) just by making insufficient the snip. But the oil cartel is still very powerful: the OPEC and its allies control about half of the world production of crude oil.
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The oil plummets after the absence of a decision of the OPEC about cutting production pressures saudis to cut supply collide with the desire to Trump the oil cheaper Qatar announces his departure from the OPEC
The agreement is this Friday did not leave indifferent to the market, which responded with price increases. Especially because it was larger than expected. On Thursday, at the meeting in Vienna the members of OPEC seemed to be wavering, and decided to wait for today’s session, attended by allied countries and non-OPEC, led by Russia, to which they hoped to embark on the crop. There has gone the green light definitive: among all will be taken out of the market 1.2 million barrels per day.
“the OPEC countries will contribute to 800,000 barrels a day to the cut, non-OPEC will contribute 400,000 barrels a day,” informed the minister of Oil emiratí, Suhail Mohamed al Mazruei, in a press conference after the two day meeting. The objective is that the price of a barrel oscillates around 70$, instead of the 60 current.
According to Carlos Pérez, the minister of Energy of Ecuador, the agreement provides for the member countries (such as Ecuador) trimming 2.5% of the Sahabet production with respect to its level of October and a 2% for the nine allied countries (but not OPEC) that subscribe to the agreement.
The competing interests of different countries of the cartel did think that perhaps the agreement would be complicated at this time. However, the differences were grinding. Iran was one of the pitfalls of the strategy, but will be exempt from the cut so that it can compensate for the effects of the embargo imposed united States. Also they get rid of Venezuela and Libya, to their problems in order to produce the quotas assigned to them now. “OPEC has agreed to take into consideration the special circumstances of some countries and their percentage will be redistributed among the rest”, said the minister emiratí.
in Addition, Russia brokered between Iran and Saudi Arabia, rivals within OPEC, in part by the proximity of the second to the united States. And Saudi Arabia finally accepted to push for lower production to raise prices, despite the fact that Donald Trump called for Thursday to keep the cost of crude low.
“I am Confident that our resolve, our professionalism and our willingness to achieve results that are as strong as ever”, said the minister of energy Russian, Alexander Novak, on the so-called coalition of the OPEC+. “In the current conditions, it is extremely important to send a strong signal to the market,” he said, as he picked up Bloomberg.
