OPEC, allies discuss oil production policy in Vienna

OPEC, allies discuss oil production policy in Vienna

DPA: According to Reuters, oil producers from the Organization of Petroleum Exporting Countries (OPEC) and their non-OPEC allies have reached an agreement on continued production, in the second half of 2019, cuts at a planned meeting in Vienna on Monday for two days, analysts said.

However, it is not clear whether the 14 OPEC members and the 10 producers from outside the organization, led by Russia, will decide to further cut production or simply extend the cap of production cuts already over on Sunday.

Cyrusde la Robia, chief economist at the Commerzbank in Hamburg, Germany, said he hasdoubts about sticking to previous agreements to cut production.

OPEC and oil producers agreed last December to cut production by 2.1 million bpd, accounting for about one percent of global supplies, in a bid to reduce supply surpluses and boost prices.

OPEC member states provide about one-third of the world's oil supplies and together account for about half of the world's crude production with non-OPEC allies.

As aresult, Brent crude prices from the North Sea rose by about $25 to reach $75 abarrel by the end of April, but prices fell in the following weeks, beforerecovery since mid-June.

Risingprices will lead to a more balance of the kingdom's budget, being the largestoil producer in the world, with prices at $85 per barrel, according to theInternational Monetary Fund (IMF).

"Thepartial recovery in prices over the past two weeks has only been achieved withSaudi Arabia," analysts at the Vienna-based consultancy JBC Energysaid.

WhileRiyadh has adhered to an agreement to strictly cut production ceilings, othercountries have been hit by continued restrictions on production volumes, whichhave led to a reduction in the volume of exports and, consequently, revenues.

DeLa Robia predicted that the lack of commitment by some countries to theproduction ceiling that may be reached at the meetings of Vienna during thenext two days.

RussianPresident Vladimir Putin said on Saturday, on the sidelines of the G20 summit,that he had agreed with Prince Mohammad bin Salman, Saudi Arabia's Crown Prince,Deputy Prime Minister, and Minister of Defense, to extend the OPEC Plusagreement to reduce oil production for another six to nine months, after theend of the current agreement on Sunday.

"Wehave agreed, and we will continue our agreements under any circumstances, and wewill continue to support the continuation of our agreements, on the quantitiespreviously agreed upon," Putin said.

The repercussions of the US-China trade war and the tensions between Washington and Iran, the OPEC member, overshadowed the meetings, as did the crisis in Venezuela, which is also a member of OPEC.

TheUnited States and China agreed, on the sidelines of the G20 summit of majordeveloped and emerging economies in Osaka, Japan, on Saturday to resume tradenegotiations. US President Donald Trump has said that he has agreed not toimpose new tariffs at present on more US market imports from China, a temporarytruce in a trade war between the two economic giants.

Trumpsaid that he had an excellent meeting with his Chinese counterpart Xi Jinpingin Osaka, noting that the negotiations were back on track and he was ready toreach a landmark agreement with Beijing.

Onthe possibility that the decisions reached in Vienna will have the desiredeffect, he said: De La Robia, depends to a large extent on expectations for thegrowth of the world economy.

Positiveexpectations tend to strengthen the oil market in anticipation of risingdemand, against a pessimistic view that signals a decline in the needs ofindustry and individuals of petroleum products.

"Ifthere are positive expectations, any decision reached by OPEC will bear fruit, andif pessimism prevails, OPEC will fail to curb these trends." De La Robiasaid.

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