Freezing will work
The decision of Russia and the three countries members of OPEC (Saudi Arabia, Qatar and Venezuela) to freeze oil production at the level of January of this year, will promote the return of balance in this market for the fall and rise to $40-50 per barrel in the second half of the year, said a recognized expert in the field of energy Daniel Yergin on the Forum of global financial markets in Abu Dhabi. “The effect of this freeze will occur by the autumn, by which time the market will return to balance, said the Pulitzer prize. — This is only the beginning of the process”. However, he does not exclude “huge volatility”.
A regular meeting of oil-producing countries will take place on 20 March in Russia, said Thursday the Minister of oil of Nigeria Emmanuel IBE Cacique. According to him, OPEC members believe that oil at $50 per barrel target level. “We’re starting to see that oil prices are rising very slowly,” said Cacique. He noted that if the members of OPEC and outside the organization the country will convene for a new meeting, “we should see a significant change in price [of oil]”. “And Saudi Arabia, and Russia — all come back to the negotiating table”, — concluded Cacique.
Achieved January 16, in the Doha agreement — the first agreement between the individual OPEC countries and outside the organization Russia over the past 15 years. The implementation of the agreement depends on, will be joined by other members of the cartel, such as Iraq and Iran. Iraq expressed readiness to take on such commitments, while Iran rejected the initiative as “absurd”.
Restrictions for Iran
According to Yergin, the plans of Iran to increase production (1 million barrels. a day this year) are a stumbling block for any agreement. Thus, according to experts, the Islamic Republic will be able to increase production only at 400-600 thousand barrels. per day, at what time Tehran may achieve this level, an analyst said.
“We hear a lot about investment in Iran. We believe that investors will be extremely wary of Iran’s policies and how decisions are made”, says Yergin.
After almost seven weeks after the lifting of sanctions against Iran, the country is still experiencing great difficulty with the increase in export deliveries of its oil, said oil expert Bloomberg’s Julian Lee.
The Agency cites employee Arab Petroleum Pipelines Co., confessed on Wednesday that the pipeline through the territory of Egypt has not yet been possible to supply oil from the Persian Gulf, as the company was still considering options for the abolition of force against Iran restrictive measures. Thus, for oil supplies to North-Western Europe from Iran’s Kharg island to the VLCC supertankers will have to make a detour around the coast of Africa with a length of 5 thousand nautical miles. In addition, the Iranian tanker operator NITC is as of February 23 was still not industry standard insurance, issued by the International group of p & I clubs shipowners ‘ liability (Intl Group of P&I), and a local court were insured with local underwriters.
The broader tanker market remained reinsured Iranian goods according to international standards because of the US restrictions. As of February 26, banks remain reluctant to negotiating swap deals with oil. Several banks approached the Greek oil refiner Hellenic Petroleum, have refused to conduct transactions related to Iran.
The end of the shale miracle
As for the American market, due to the “shale revolution” of the tanks was filled to an eight-year high. The fall in oil prices first slowed production growth in the US, now she has started to fall. Yergin estimates that by the summer of 2016 the U.S. will produce 1 million barrels. a day less than at the peak in April last year. Then the country had produced a record 9,69 million barrels. a day of shale oil, according to U.S. energy information, of this amount was given to 5.62 million barrels. a day. “Ahead of bankruptcy, mergers and acquisitions, as well as impairment of assets”, — said the expert.
According to Yergin, in the current environment of the global oil sector to improve its efficiency. “We are seeing a positive trend in the global oil industry, says Yergin. And countries, companies and time to make the necessary calculations, countries understand that they must find a way out”.
