Russian Minister of Energy Alexander Novak (on screen) at the meeting of the Organization of Petroleum Exporting Countries (OPEC), 7 December 2018 in Vienna, Austria (AFP / JOE KLAMAR)
OPEC and its allies led by Russia will lower their production of 1.2 million barrels a day for the next six months, according to the terms of an agreement signed on Friday that gave color to oil, risk of irritation of the president of the United States Donald Trump.
This goal, eagerly awaited by the markets, will be distributed for a total of 800,000 barrels a day for the fourteen OPEC countries and 400,000 for its ten partners, including Russia, said the organization at a press conference. is held in its Vienna office.
The reduction, corresponding to slightly more than 1% of world production, is intended to rebalance the market and halt the fall in prices, which fell by 30% in two months in a context of chronic overproduction.
After a difficult week, amid the delicate negotiations between producers, the price of Brent crude for delivery in February rose to $ 1.61, or 2.68%, to close at $ 61.67. The US WTI for January delivery rose $ 1.12, or 2.18%, to $ 52.61.
The recent fall in prices has been favorable to consumers and well received by President Donald Trump who wants to save American motorists. But the biggest global exporters that depend on oil revenues, primarily Saudi Arabia and Russia, hope to reverse the trend.
– Spread the effort –
The decline "should help the market balance first," said Russian Energy Minister Alexander Novak, whose country is the world's second largest producer, recognizing that the talks were "complex".
OPEC crude oil reserves (AFP / AFP)
It took two days of official meetings for the various heavyweights to give their violins in this alliance formed in 2016 between OPEC and ten other producers, including Russia, which is by far the largest.
The talks were stumbling on the allocation of falling quotas, with each producer asking for his partners' efforts.
Russia felt that it was "difficult" to reduce supply in the middle of winter, given the country's needs at that time.
Saudi Arabia, the third largest producer in the world, is facing pressure from the United States at a time when the kingdom is weakened by the diplomatic repercussions of the Khashoggi case.
Donald Trump Wednesday asked that OPEC, which pumps a third of world crude oil, maintain its production at a high level. Saudi energy minister Khaled al-Faleh said the recent increase in Saudi production, sometimes interpreted as a move to Washington, "was not political".
– Dangers –
The balance between supply and demand is difficult to achieve and OPEC will meet next April to assess the impact of these new production cuts, which will come into force in January.
With a hard line and a geopolitical rival of the realm, Iran must be exempted from production cuts, as do Libya and Venezuela, three countries whose oil industries are undergoing serious hardship.
"These exemptions mean that all other countries will have to make a little extra effort," said United Arab Energy Minister Souheil al-Mazrouei.
Venezuelan President Nicolas Maduro welcomed the agreement. "It will allow prices to stabilize at a fair level, only for producers, only for consumers and only for the economy in general," said Maduro in a speech broadcast on Venezuelan state television VTV on his return. in Caracas after a visit to Moscow.
It is hard to predict whether OPEC and its allies, which account for more than half of the supply, will be able to sustainably reverse price movements, but "such a decline in output will reduce the balance of the oil market. from the third quarter of 2019, "analysts from the consulting firm Wood MacKenzie said.
"The decline was necessary to stabilize prices", they summarized, especially in the perspective of a slowdown in global growth and while the Americans, the world's largest oil producer, are continuously increasing.
The last few months, however, have shown that nothing always goes according to plan.
But the US temporary exemptions to eight importing countries contributed to the collapse of prices, canceling the gains made in early 2017.
cutters-js / SMK / NAS / PLH