OPEC meeting, what happened in opec meeting today
The OPEC meeting was finally held on December 9, 2020, through a webinar.
Previously, the OPEC meeting agenda was according to schedule on April 6, 2020
But the schedule was postponed so that the OPEC meeting eventually on April 9, 2020.
The postponement of the schedule is to give more time for negotiations.
Between oil producers regarding the reduction of crude oil supplies.
Earlier, Saudi Energy Minister Prince Abdulaziz bin Salman also rejected the Russian statement.
That the Saudi Kingdom withdrew an agreement to cut production.
In the previous OPEC + meeting, the OPEC + technical advisory committee recommended to the organization to cut additional oil production by 1.5 million BPD (barrels per day).
Saudi Arabia as the de facto leader of OPEC fully agreed to the idea in order to maintain price stability in the market.
But Russia reject the proposal.
This refusal angered Saudi Arabia and beat the price war with Russia.
Saudi Arabia takes maneuver by discounting its export oil price (official selling price / OSP) by 10%.
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OPEC Meeting 9 April 2020
After the schedule resignation, finally, OPEC Meeting and the non-OPEC Ministerial held a meeting through a webinar, on Thursday, April 9, 2020.
During the event, HRH Prince Abdul Aziz Bin Salman, the Saudi Minister of Energy became the chair of the meeting.
And the joint Chairperson HE Alexander Novak, Minister of Energy of the Russian Federation also attended the teleconference.
Some countries that also participated in the OPEC meeting were Colombia, Argentina, Indonesia, Ecuador, Egypt, Norway, Trinidad and Tobago and the International Energy Forum (IEF), they were present as observers.
OPEC meeting agreement
In the OPEC Meeting and participating in non-OPEC oil countries, they have drawn up the text of the agreement.
In the Declaration of Cooperation, for their continued commitment to achieving and maintaining a stable oil market.
Besides to stabilizing prices, also talks about the joint interests of oil-producing countries, for the purposes of efficiency, economy, regulating supply to consumers, and the return of equity capital invested fairly.
Citing from OPEC.org The OPEC meeting on 9 April 2020 produced one of some agreement.
Adjusting overall crude oil production by 10.0 Millions of Barrels per Day.
Starting May 1, 2020, for the initial two month period ending June 30, 2020.
1 July 2020 to 31 December 2020, the agreed total adjustment is 8.0 Millions of Barrels per Day.
Then there will be an adjustment of 6.0 Million Barrels per Day for a period of 16 months, from 1 January 2021 to 30 April 2022.
The baseline for the adjustment calculation is oil production in October 2018.
Except for the Kingdom of Saudi Arabia and the Russian Federation, both with the same base rate of 11.0 Millions of Barrels per Day.
All agreements that result from the OPEC meeting will be valid until 30 April 2022, but the extension of this agreement will still be reviewed during December 2021.
The Saudi-Russian oil price war is over
After the OPEC agreement, the virtual meeting ended the war on oil prices between Saudi and Russia.
The drama of the oil war between Saudi Arabia and Russia is finally over.
OPEC and Russia, or better known as OPEC +, agree to adjusted oil production.
OPEC + will reduce production to 10 million barrels per day (BPD), or about 10% of global supply.
From May to June 2020. Where all member countries will contribute 23%, Arabs and Russians cut 2.5 million BPD and Iraq 1 million BPD.
Then in July until the end of 2020, oil production will be cut by 8 million BPD.
While in 2021 until April 2022, production will be cut by 6 million BPD like as in the agreement.
During the OPEC meeting, OPEC Secretary-General Mohammad Barkindo said about the pandemic event and hopes for the future.
COVID-19 is like an invisible beast that is possible to still attack everything in the future
The United States (US) and other producers expect to take the same actions to prop up prices.
“We expect other producers outside OPEC + to join, maybe can be obtained at the G20 meeting,” said one Russian negotiator, Kirill Dmitriev, told Reuters.
Russia expects other countries to cut production by 5 million BPD.
Response of Trump
Meanwhile, the White House also announced.
That there had been serious talks between US President Donald Trump, Russian President Vladimir Putin, and Arab Prince Mohammed bin Salman to shore up prices.
“Trump made a video conference call with the two leaders discussing the oil deal,” tweeted Medsos director of the White House, Dan Sacviro.
The price of Brent oil has reached its lowest level in 18 years last March.
One type of oil that is very sensitive to the Arab situation yesterday also traded around the US $ 32 per barrel, or still half the price at the end of 2019.
Mexico strongly rejects the suggested production cuts.
OPEC and its allies ultimately failed to reach an agreement to reduce oil production in significant amounts.
Because Mexico rejected the proposed new production figures.
Previously, the world oil producer Alliance OPEC + previously agreed to reduce oil production by 10 million barrels per day.
This adjustment to overcome oversupply due to slowing world economic activity affected by the coronavirus (COVID-19).
All meeting participants, OPEC and non-OPEC, agreed to the agreement, except Mexico.
This means that a 10 percent cut in global production will not occur unless everyone agrees.
The price of West Texas Intermediate (WTI) crude oil dropped 9.29 percent to the US $ 22.76 per barrel late Thursday.
While Brent fell 4.14 percent to the US $ 31.48.
According to the details of the agreement.
Russia will reduce production by 2 million BPD and Saudi Arabia cut 4 million BPD from 12.3 million in April.
Other OPEC members have not yet discussed the rate of reduction in production.
In one report that Mexico would only cut a quarter of the total demanded by OPEC.
Although Mexican President Andres Manuel Lopez Obrador said that Trump offering to make additional US cuts in his name, even that had not yet reached an agreement of the amount requested by OPEC.
Oil prices falling due to the impact of coronaviruses will certainly make oil-producing countries feel the influence on their production costs.
One of the main causes of the decline in oil demand is efforts in all countries to stop the spread of coronavirus.
So that the amount of supply exceeds demand and causes prices to decline.
With the agreement to cut production from the OPEC meeting, it is expected that there will be a balance between supply and demand so prices rise again.
However, the effort seems to be met by obstacles from Mexico because they doubt that the price reduction is caused by an overloaded supply.