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The Organization of the Petroleum Exporting Countries (OPEC) has completely lost control of the oil market. The actions (or tweets) of three people – Russian and US Presidents Donald Trump and Vladimir Putin – and Saudi Crown Prince Muhammad bin Salman will determine oil price developments in 2019 and beyond. However, the course desired by each depends on different things.
While OPEC strives to find a common advantage, the United States, Russia, and Saudi Arabia manage global supply. Together, they produce more oil than 15 members of OPEC. All three have record feats, and everyone could increase production next year, although maybe not all three will do so.
Saudi Arabia and Russia forced in June the release of the powers of OPEC + OPEC + (OPEC and the new oil exporting alliances) in force since the beginning of 2017. After that , production has reached a record or almost. At the same time, US production has increased unexpectedly as oil pumping companies from the Permian Basin to Texas bypass the bottlenecks that have impeded the offshore oil supply in the United States. southern United States.
This situation, as well as the decision by US President Trump to allow some countries to import Iranian oil, helped to address the oil shortage that worries about an overestimated market for three months. Oil inventories in developed OECD countries, which have declined since 2017, are now on the rise and are expected to exceed the five-year average when finalized data for October are finalized, according to the International Agency. of energy.
When oil prices began to fall, Saudi Arabia announced that it would reduce its exports by 500,000 barrels a day next month and warned other manufacturers to reduce production levels by 30 percent. about one million barrels a day from October. Russian President Putin received a lukewarm response and Trampa's refusal to connect to Twitter.
Bin Salman needed oil revenues to finance ambitious Saudi Arabia's transformation projects, while avoiding the rebellion of the victims. The International Monetary Fund charges a fee of $ 73.3 per barrel next year to harmonize next year's budget. The Brent oil, which is taken as a reference and exploited from the North Sea, is sold at a price below this one for five dollars, while the oil exported from Saudi Arabia is sold at a lower price than of the index. The only way to get the price they want is to extend the decline in exports for the third year in a row.
Putin and Tramp could be causing additional difficulties. The Russian president is not enthusiastic about the limitation of production. Their budget is less dependent on the price of oil than when Russia agreed to join OPEC efforts to establish a new balance in the oil market in 2016, and Russian oil companies want to produce in the oil fields in which they have invested.
Putin may conclude that maintaining better relations with Bin Salman is worth fewer victims, but it is not premature to conclude that Russia will accept an extension of the production limit when producers meet next month in Vienna. Putin said that a price of about 70 dollars a barrel would suit "fully".
Of course, Tramp's opposition will be much stronger and will come at a time when he and Muhammad bin Salman are seeking to preserve political relations, while US senators plan to introduce tougher sanctions against the government. Saudi Arabia in response to the war in Yemen and the murder of dissident journalist Jamal Kashogy.
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