OPEC oil basket collapses

US, WASHINGTON (ORDO NEWS) — The price of the OPEC oil basket fell on Wednesday, April 22, by $ 2.41 to $ 12.22 per barrel, while on the previous trading day it was $ 14.63 per barrel. Such data are presented today on the cartel’s website.

Oil basket “OPEC is a conditional mixture composed of oil brands that are supplied to the world market by 14 cartel countries (Algeria, Angola, Venezuela, Gabon, Iran, Iraq, Congo, Kuwait, Libya, Nigeria, United Arab Emirates, Saudi Arabia, Ecuador and Equatorial Guinea). The historical maximum for the “cartel” of the cartel is the price mark of $ 140.73 per barrel, which was recorded on July 3, 2008.

Meanwhile, Dmitry Babin, stock market expert at BKS Broker, notes that world oil prices “made a strong upward movement” on Thursday morning, but then “began to take positions”, and “now (the benchmark) Brent is adding 4.4% about $ 21.8 per barrel.”

“The improvement in the mood in the oil market was caused by media reports about the spread among OPEC participants + of the opinion that the measures taken to reduce production are not enough and new steps need to be taken in this direction. Russia and Saudi Arabia declared their readiness to take additional measures if necessary, although they are still very restrained about its availability,” the expert’s review said.

Recall also that since the beginning of this year, several waves of falling prices for “black gold” have swept across the world oil market. The negative situation is caused by a whole complex of factors: the general overproduction of raw materials, a sharp drop in demand against the backdrop of the rapid spread of the coronavirus infection COVID-19 (a pandemic was announced on March 11) and concerns about its impact on the global economy, as well as the collapse of the OPEC + deal (officially with April 1, but in fact after the futile negotiations of oil-producing countries at the March 6 meeting in Vienna). Just the last circumstance became the trigger for the collapse of oil prices. In addition, Saudi Arabia announced its intention to increase production and lower oil prices. Later, Iraq, Kuwait, the UAE and Nigeria announced a desire to lower prices.

For the I quarter of 2020, the price of Brent collapsed by 65.6%, and WTI – by 66.5%. Moreover, at the end of March, the cost of the June Brent futures fell below $ 22 per barrel (up to $ 21.72), that is, to a minimum since March 2002, and the May futures for WTI – up to $ 20.1.

On April 12, OPEC + countries finally agreed on a new deal, in which 23 states became parties. The agreement will be valid for two years – from May 1, 2020 to May 1, 2022. In May-June of the current year, production decline will be 9.7 million barrels per day (from the level of October 2018), then – by the end of 2020 – by 8 million barrels, and by 6 million – until the end of April 2022.

At the same time, for Russia and Saudi Arabia, the reference base will be 11 million barrels per day (in the first 2 months, the Russian Federation will reduce production by 2.5 million barrels per day). The new OPEC + deal was a forced reaction of oil-producing countries to the market situation and pressure from the United States. However, in general, it does not overlap the volume of decline in global demand, and huge stocks of raw materials have accumulated in the market.

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