Weakens OPEC limits oil production

OPEC August 1 will begin to check the stability of the recovery of the oil market: the Alliance will move to the second stage started in may of the deal to reduce output, which is the easing of restrictions with unprecedented 9.7 million million barrels per day to 7.7 million.

It is expected that this phase will last until the end of the year and to avoid excessive overheating of the market. As reported by Minister of energy of Russia Alexander Novak, in July, the oil market was fairly balanced and was able to go in a shortage of supply due to transaction-OPEC and reduce oil production in several other countries.

Some experts, however, warned that in the face of new outbreaks COVID-19 in a world like this move by the OPEC can be extremely risky. "The experiment of OPEC to increase production since August can have unpleasant consequences, since the worst of the demand on the world oil market aren't behind me. It will go into a state of mini-excess of supply shortage it will not be until December," say the experts Rystad Energy.

However, the actual arrangement of the Alliance suggest that due to the "debt" to reduce oil production nedosypayuschih informed deal the OPEC countries and pledged to compensate in July-September real reduction in August will be above the target. Thus, the energy Minister of Saudi Arabia Prince Abdul Aziz bin Salman was assessed that given the "losers" limits of OPEC in August-September can be up to 8.3 million barrels per day.

Among the "losers" was previously called Nigeria, Iraq, Angola, Kazakhstan and a number of small oil producers. While maintaining a high discipline of OPEC , and perform "losers" of its promises, this situation can create a buffer for the market full of uncertainties. In General, the increase of supply, as assured by the Russian and Saudi Ministers should go to the domestic market of the countries of the Alliance due to the seasonal recovery in demand.

According to senior analyst on oil and gas sector of the energy centre of Moscow school of management SKOLKOVO Catherine Grushovenko, the oil market really is still high uncertainty.

"Therefore, the state of the market will depend on what eventually outweigh: the excess demand or supply. Do not forget that there is still uncertainty on the issue of new waves of quarantine," warns Grushovenko.

As for prices, the Manager on work with clients of Saxo Bank Edgar Couples believes that the ability of OPEC to influence them by adjusting quotas in the near future will be limited.

"In the short term more attention will be paid to the oil reserves in the United States as an indicator of recovery in demand, while some regions are preparing for the second wave of the pandemic and hopes for a speedy recovery of air traffic are still vague," he told the Agency.