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Predictions for easing restrictions on oil production

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Predictions for easing restrictions on oil production

Tuesday 24 December 2019 76
Baghdad / Farah Al-Khaffaf

Oil prices recorded a slight increase with the approaching of Christmas, amid expectations that the United States and China will soon conclude a trade agreement.

It is looming on the horizon that OPEC and its allies from other major oil producing countries may consider easing restrictions imposed on crude production at their meeting in March next year.

As for the Iraqi side, which played a pivotal role in OPEC talks with the oil-producing allies, with regard to the agreement to reduce oil production, it is committed to the collective decision in the event of a loosening of restrictions or remains as is the case.

Individual decision

Spokesman for the Ministry of Oil, Assem Jihad, said in a special statement to "Al-Sabah": "Iraq is with the collective decision within the organization and there is no individual decision, especially that any submitted and presented proposals are discussed in the ministerial meeting of OPEC members and allies of the producers, who is scheduled It will be held in the first quarter of next year 2020."

Jihad indicated that "Iraq is a member of a committee to monitor production, and it monitors the commitment of members to reduce production and the developments that take place in the oil market after that.

Then, on the basis of it, ministerial meetings will be held for OPEC members and members producing from outside it, and on the basis of which a decision will be taken. Final".

He added: "Iraq, with any agreement aimed at stabilizing the oil market and restoring the balance between supply and demand, and supporting oil prices, especially that (Iraq) played a large and pivotal role in bringing the views of the past meetings closer, resulting in the recent agreement to commit to reducing production and increasing it by specific proportions."".

Absorption of excess

Jihad emphasized that "the aim of the decision was to restore balance to the oil market and absorb the oil surplus that affects the oil market and price instability, and this confuses the global economy."

As for the trade agreement between the United States and China, a preliminary trade agreement was announced earlier this month, seeking to end the months-old trade war between the two largest economies in the world, which led to market turmoil and affected global growth.

Reduced tensions between the United States and China have improved business confidence and boosted economic growth prospects and demand for crude.

"Oil prices will continue to benefit from the positive developments of trade between the United States and China," said Stephen Ines, senior market analyst at Axi Trader.

American drilling companies may also expect prices to rise, as last week it recorded the largest increase in the number of rigs in a week since February 2018.

On the other hand, Russia stated that "a group of OPEC producers may consider reducing production cuts next year, which covered support from investor optimism that an initial trade agreement between the United States and China will be signed soon."

Russia's production

"We can consider any options, including a gradual easing of quotas, including the continuation of the agreement," Russian Energy Minister Alexander Novak said, noting that "Russia's oil production has reached a record high this year."

Novak also stressed that "cooperation with (OPEC) to support the market will continue", while analysts expect a second weekly drop in US crude oil stocks.

Brent crude rose 12 cents, or 0.2 percent, to $66.51, and the US West Texas Intermediate rose 7 cents to $60.59 a barrel, while the OPEC basket containing 14 types of crude recorded $67.93 a barrel.

Global supplies from producers outside OPEC are expected to rise next year as production increases in countries including the United States, Brazil and Norway.

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