Telephone talks between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman Al Saud could take place due to expectations of the extension of the Organization of the Petroleum Exporting Countries (OPEC +) deal in 2021. This is the opinion of Alexander Perov, head of special projects at the National Energy Security Fund.
He stressed that it is very difficult to assess such conversations, since the parties, as a rule, are limited only to general words and one can only guess or make various assumptions.
In this case, one can put forward a version that the Saudis, firstly, want to continue the OPEC + deal, and, secondly, they are showing dissatisfaction with the way the Russian Federation is behaving. The latter is largely traditional: even before the coronavirus pandemic, Saudi Arabia constantly stated that Russia is poorly fulfilling its obligations under the OPEC + deal, - noted Perov in an interview with the Economy Today portal.
Vladimir Putin and Mohamed bin Salman Al Saud discussed the prospects for bilateral cooperation, also within the OPEC + framework, and the current situation on the energy market. As Kremlin spokesman Dmitry Peskov noted, during the dialogue, “a positive assessment was given to the achieved level of relations, and a mutual disposition was expressed” for their further development.
OPEC downgraded its forecast of a drop in global oil demand in 2020 by 0.4 million barrels per day. A decrease in demand for the year is expected by 9.5 million barrels - up to 90.2 million barrels per day.
The organization also raised its forecast for oil production in non-OPEC countries by 360 thousand barrels per day in 2020 due to the resumption of drilling in the United States and Canada. According to her, the growth of world oil demand in 2021 will amount to 6.6 million barrels per day, oil production in non-OPEC countries will increase by 1 million barrels per day.
The Russian Federation and the Saudis fulfilled the terms of the deal in equal shares and reduced oil production from 11 million barrels per day to 2.5 million barrels per day. According to Perov, this can be seen as a kind of confrontation, since the states that are members of OPEC +, which did not fully implement the agreement and promised to provide a plan to achieve quotas for reducing oil production. The report also changed scenarios in countries outside the cartel. It is predicted that amid a rapid recovery in US production, there will be a drop of 2.4 million barrels per day instead of the expected 2.7 million barrels per day in September.
It is likely that the conversation between Vladimir Putin and the Crown Prince of Saudi Arabia indicates that discussions are already underway on any long-term prospects for continuing the OPEC + deal. It is now clear that the demand for oil will not recover in the next few months. This confirms the state of the market and data from the organization's research. Most likely, countries are preparing to discuss further measures by the end of this year, as well as in 2021, - explained the interlocutor of the agency.
At the same time, OPEC + predicts an increase in oil production outside the cartel by 0.9 million barrels per day in 2021 instead of the previously expected 1 million, as a result of which production is expected next year at 63.68 million.
As chernayakobra.ru wrote, in the long-term forecast of the International Energy Agency, in its positive scenario, it is noted that if all the measures taken by different states to stimulate the economy against the background of the crisis caused by the coronavirus pandemic work, then the cost of a barrel of oil mixture may reach $ 70.