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Home Breaking News VELES Capital analyst: Oil market awaits news from Iran's nuclear talks

VELES Capital analyst: Oil market awaits news from Iran’s nuclear talks

Investors in the oil market are waiting for news from Iran’s “nuclear talks” and possible shifts in this matter. This opinion is expressed by Elena Kozhukhova, an analyst with VELES Capital.

According to her, today the world oil market is showing a “moderately negative attitude.” “The nearest futures for Brent and WTI crude oil by the middle of the session in Russia retreated from the lows of the day and lost about 0.5% in the absence of weighty drivers of movement,” the expert said in his review.

“Investors are waiting for news from Iran’s nuclear talks (Tehran’s talks on a nuclear deal in the 4 + 1 format (Russia, Great Britain, China, France and Germany) – ed.) And possible shifts in this matter,” the analyst points out.

Let us also recall that at the end of the first quarter of 2020, several waves of falling prices for “black gold” swept across the world oil market. The negative situation was caused by a whole range of factors: a general overproduction of raw materials, a sharp drop in demand amid 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 from April 1, but in fact after fruitless negotiations between the oil-producing countries at a meeting on March 6 in Vienna).

However, on April 12, OPEC + countries agreed on a new deal, in which 23 states became participants. The agreement is designed for 2 years – from May 1, 2020 to May 1, 2022. 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 did not cover the decline in global demand; moreover, huge reserves of raw materials have accumulated on the market.

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During 2020, the OPEC + countries held meetings, adjusting the parameters of the transaction taking into account the situation on the world oil market – starting in May to reduce oil production by 9.7 million barrels per day, in August they relaxed the restrictions to 7.7 million for the period until the end 2020 year.

On January 4-5, 2021, the ministers of the OPEC + countries made a compromise decision, according to which, starting from February, Saudi Arabia will voluntarily reduce oil production by almost 1 million barrels per day within two months, to about 8.125 million barrels per day, and a few more OPEC member countries will cut production by two months by a total of 425 thousand barrels per day. At the same time, Russia and Kazakhstan got the opportunity to increase production in February and March.

On March 4, following a regular meeting, the OPEC + participants unexpectedly decided to maintain the current level of oil production for all countries of the alliance, except for Russia and Kazakhstan, which will be able to increase production by 130 thousand and 20 thousand barrels per day from April, respectively.

On April 1, the OPEC + countries agreed to gradually increase oil production: in May and June – by 350 thousand barrels per day, and in July – by 400 thousand barrels per day.

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