Oil - An Opep+ agreement if the US joins the effort

  •   08/04/2020 - 11h23
  •   DEHOUI Lionel

According to several Opep+ sources, "without the US, no deal". On the US side, Donald Trump was quite clear in his statement about the negotiations and the involvement of the US oil giants. The US President states that "this happens automatically". He says, "No one has asked me this question yet, so we'll see what happens. However, the current situation remains tense. The whole world is waiting for the conclusion of an agreement between the main oil-producing countries. But the tug-of-war continues between Russia and Saudi Arabia. Oil industry players are just hoping that after the talks the major producers can agree to reduce oil production. The countries concerned will once again have to discuss this issue on Thursday by teleconference and they would like the USA to participate in the efforts to be made.

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Oil - An Opep+ agreement if the US joins the effort
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The sector in decline

The health crisis caused by the Covid-19 knows no borders and no sector of activity. It ravages everything in its path. The oil sector too has been brought to its knees and is experiencing a consequent drop in global demand. In fact, this has fallen by as much as 30%, a significant loss of 30 million barrels in one day. At the same time, Russia and Saudi Arabia are flooding the market.

The two conflicting oil powers have littered the market with increased production. The decision to cause other countries such as the United States to cut production came from Opep+. The latter wishes to generalize the situation so that all countries can get by as well as possible. According to reliable sources, the Opep+ meeting, which will be held by videoconference, will start at 14:00 GMT this Thursday. In addition, Opep+ represents the Organization of Petroleum Exporting Countries.

 

The percentage of reduction and the USA

Negotiations have been under way since last week between OPEC members and its collaborators in the image of Russia. The focus of the discussions is of course the reduction of oil production at a rate of 10% of world demand. But the US remains on the sidelines of any commitment to sign any agreement. They expressed their encouragement for the smooth progress of discussions on the issue.

Indeed, in the name of certain antitrust laws, US companies find themselves unable to coordinate the flow or volume of their production. It is in this context that the American president suggested that the organization (Opep) had not yet sought to integrate American companies into its oil sector. Opep had not asked him to reduce their production which was already down last week.

Information: The reduction should help support oil prices. From Friday, the various energy ministers of the G20 members will have to meet to examine the possibility of engaging the United States in the signing of a new agreement. With the health crisis, this meeting will be held by videoconference with representatives of international organizations.