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OPEC, the US and Russia agree to reduce the supply of oil

OPEC and its partners, together with the United States and Russia, agreed this Sunday night to the “biggest cut in oil production” in history, in an attempt to drive up the prices of this raw material due to the important drop in demand due to the global pandemic of Covid-10 and despite initial tensions between Moscow and Riyadh. The adjustment, estimated at 9.7 million barrels less per day in the black gold market, will begin in May and will last two months, although it is not ruled out to extend or vary it according to the economic circumstances.

The Kazakh Ministry of Energy on this occasion acted as virtual host of a telematic summit that had a first date on Thursday, although the agreement was not closed then due to Mexico’s final objections. On Friday, during the Saudi Arabia-sponsored virtual G20 Summit of Energy Ministers, attempts were made to iron out the final differences, but failed to reach full consensus. This Sunday, however, 23 producer countries did finally sign the cut agreement.

«The great oil agreement with OPEC is done. This will save hundreds of thousands of jobs in the energy sector in the United States, “tweeted President Donald Trump. “I would like to thank President (Vladimir) Putin of Russia and King Salman of Saudi Arabia. I just spoke to you from the Oval Office, “he added.

“The worst has been avoided”

From Moscow, the Kremlin also underlined the “great importance” of the pact, which was largely carried out by the push of those three countries, the world’s leading oil producers. And although Magnus Nysveen, an analyst at the specialized consultancy Rystad Energy, points out that the drop in the oil supply “is less than what the market needed, the worst – in reference to a possible collapse of it – has been avoided for the time being. ». However, it will be necessary to see how the Stock Markets respond this Monday, when prices are expected to appreciate appreciably.

At the beginning of March, the price of oil (in this case the Brent class, a benchmark for Europe) was around 50 dollars a barrel and is now below 21. With the approved production adjustment, which is estimated to be around 23% on average, it is expected that the price of a barrel can recover that level in the medium term. However, it remains to be seen how the new crude supply figures will later be matched against a slower global economic recovery, in order to avoid possible second-round negative effects.

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