Friday , March 31 2023

OPEC is considering cutting oil production – fear of overproduction in 2019


"He agrees that there will be too much oil in the market in 2019," Oman Oil Minister Mohammed bin Hamad Rumhi told The Wall Street Journal after a ministerial meeting in the OPEC Committee to monitor the oil market. The meeting took place in Abu Dhabi on Sunday.

Oman is not a member of the Organization of Petroleum Exporting Countries (OPEC), but participates in the organization's decisions to regulate production.

The cuts that are planned are made by the 15 OPEC countries, which are most of the Middle East oil countries, to prevent a drastic drop in prices.

It was Saudi Arabia and other oil-exporting countries that met in Abu Dhabi this weekend. There was a reduction in oil production of 1 million barrels. The decision will be taken at the ministerial meeting of OPEC in Vienna on 6 December. Saudi Arabia must be prepared to take half of this cut; 500,000 barrels.

Russian doubt

Russian oil minister Alexander Novak told CNBC on Sunday that no quick decisions should be made.

"The market is volatile and quick decisions on production cuts can make the impact bigger," he said.

He did not rule out the fact that Russia, which is not a member of OPEC, could participate in production cuts in December.

Saudi Arabian oil minister Khalid al-Falih said it was too early to say what will be the conclusion of the ministerial meeting in December but that OPEC will not strive to make the necessary reduction.

At geopolitical level, not least, US sanctions against Iran pose challenges to the oil market. In addition, a significant increase in oil production in the United States.

The dramatic fall for North Sea oil

A North Sea oil barrel was traded for about $ 85 on the spot market in mid-October, and on Friday it was under $ 70 but ended at $ 70.94. This means a price drop of 20% in less than a month.

This can be read in conjunction with share prices in oil companies. Equinor (formerly Statoil) declined by 7.4% during this period, Aker BP, which owns Kjell Inge Røkke as its dominant owner, declined by 21.9%. According to Finansavisen, this means that Aker BP paper has become 30 billion kronor less for a month.

The newspaper asked the stock market last month's stock issue in oil-related shares.

According to Finansavisen, companies that provide oil services also noted the drop in oil prices. For example, the seismic company, Petroleum Geo Services, declined by 34.1%. One third of the value has disappeared.

No, Ekofisk was not a Christmas present

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