MOSCOW (Reuters) – There aren`t the same sharp differences between Russia and the OPEC oil group as in early 2020, a Kremlin spokesman said on Monday, as major oil producers debate the future of their agreement on production cuts. Under the agreement, members of the Organization of Petroleum Exporting Countries, along with Russia and other countries, will increase production by 500,000 barrels per day in January and possibly a similar amount in the following months. The increase, less than 1% of the global oil market, comes at a time when demand is still under pressure from the coronavirus pandemic. “I welcome OPEC-plus for achieving an important agreement that comes at a crucial time today, as oil demand continues to recover and the world economy is reopened,” U.S. Energy Secretary Dan Brouillette wrote on Twitter after the extension. The Russian government had originally forecast a surplus of 930 billion rubles ($11.4 billion) in 2020, but after the outbreak of the price war, it said it expected a deficit. The ruble fell after falling more than 30 percent between early 2020 and March 18. [33] Oil ministers from the Organization of petroleum exporting countries and other Russian-led producers met via video conference on Saturday and agreed to continue to cut 9.7 million barrels per day – or about 10 percent of world production normally – by July, according to an OPEC press release. Starting in 2014, U.S. shale oil production increased its market share; While other producers continued to produce oil,[11][12] prices rose from more than $114 per barrel in 2014 to about $27 in 2016. In September 2016, Saudi Arabia and Russia agreed on cooperation in oil price management and created an informal alliance of OPEC and non-OPEC producers, known as OPEC. Until January 2020, OPEC had cut oil production by 2.1 million barrels per day (bpd), with Saudi Arabia making the largest reduction in production. “Despite the economic and financial circumstances facing Iraq, the country maintains the agreement,” OPEC spokesman Assem Jihad, a spokesman for Iraq`s oil ministry, said on Saturday.
According to the initial agreement reached on 12 April by the joint producer group OPEC Plus, production was expected to increase gradually after June. Before the opening on March 9, 2020 (Monday), the Dow Jones Industrial Average Futures market fell by more than 1,300 points and erupted due to a combination of coronavirus concerns and the oil price war. [5] On Monday, March 9, 2020, global stock markets experienced a significant drop due to a combination of panic over the COVID 19 pandemic and the price fight between Saudi Arabia and Russia. The Dow Jones fell above 2,000 points or 7.8%, exceeded the futures market forecasts and became the biggest loss of points in its history. [57] Other stock markets were also affected: the S-P 500 contracted by 7.6% and the NASDAQ Composite by 7.2%. Italy`s FTSE MIB suffered the biggest percentage decline and the index fell 11%. [58] In the United States, circuit breaker drops were triggered to avoid a stock market crash, resulting in 15-minute pauses. [59] On March 8, 2020, Saudi Arabia launched a price war with Russia, which facilitated a quarterly drop of 65% in the price of oil. [1] In the first weeks of March, U.S. oil prices fell by 34%, crude oil by 26% and Brent oil by 24%.
[2] [3] The price war was triggered by a breakdown in the dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over planned oil production cuts in the midst of the COVID 19 pandemic. [1] Russia left the agreement, which led to the downfall of the OPEC alliance.
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