Osama Suleiman from Vienna
Crude oil prices were inspired by new gains this week, broadcast by Saudi optimism about the growth of Asian demand, in conjunction with Iraq’s pledge to compensate for the failure to adhere to production cuts starting this month, in addition to OPEC + efforts in general to restrict the oil supply.
The price gains curb the tremendous pressures on the US economy due to the acceleration of coronavirus infections, weak demand for fuel, and fears of continued lockdowns in some states.
He told Al-Eqtisadiah, specialists and oil analysts, that Aramco's data on the recovery of Asian demand contributed greatly to improving market sentiment and reducing the focus of attention on the risks of Corona that have been going on for several months. Significant cuts in crude production, following Saudi-Iraqi contacts at the level of the oil and energy ministers.
The specialists promised that the issuance of these pledges by the second-largest producer in "OPEC" is a long-awaited positive step to correct performance among producers and strengthen their commitment to the production reduction plan, pointing out that this pledge raises positive sentiment in the market, as it is an important step in the way of fulfilling production quotas oil.
The specialists said that the market is expecting the OPEC + ministers to hold an online meeting next week to review the joint action strategy in light of market developments, especially after the issue of poor compliance dominated the recent ministerial meetings, in addition to reviewing the situation of oil stocks, supply and demand interactions, investment issues, and security of supplies.
Robert Stehrer, Director of the Vienna International Institute for Economic Studies, said that the beginning of the week’s transactions is very positive, especially in light of the promising data released by the giant Aramco on the status of Asian demand, which strengthens hopes for restoring balance and stability in the market despite the tremendous pressures resulting from The pandemic, which has affected the US economy in a large scale and then the global economy, especially as it coincides with the escalation of tension between the United States and China in many files.
He added that the success of the "OPEC +" alliance and the positive pressures, through which he urges producers to achieve higher compliance with the agreement to reduce production, cannot be denied. These pressures began to succeed by obtaining serious Iraqi pledges to implement the required production cuts quotas in addition to compensating for the previous failure. In the first months of the launch of the plan to address the repercussions of the Corona pandemic.
For this part, Randolph Huber, an energy researcher, and director of a specialized website explained that the successful contacts that took place between Prince Abdulaziz bin Salman, Minister of Energy and his Iraqi counterpart, Oil Minister Ihsan Abdul-Jabbar, contributed to bridging distances and supporting consensus on joint action in the interest of stability. The market, especially with Iraq agreeing to correct the previously faltering commitment.
He mentioned that the previous Iraqi performance was weak, especially in the months of May and June last, when production was reduced by only 11 thousand barrels per day, indicating that according to the recent Saudi-Iraqi understandings, Iraq will cut an additional 400 thousand barrels per day. In August and September, in addition to a previous commitment to reduce 850,000 barrels per day every month, which is a very positive development, as it contributed to rising oil prices for the new week with good gains.
For this part, Andrew Morris, Director of the International Consulting Company, "Boeri", said that supporting the balance in the market in light of the current stage full of sharp downward pressures is a difficult, but not impossible task, especially since the "OPEC +" bloc has succeeded since its inception in 2016 in overcoming the cycle It is difficult economic and is currently undergoing good steps, especially with its success in applying record reductions amounting to 9.7 million barrels per day over the past three months and continuing the same approach after reducing the restrictions of the reduction in a limited way.
He stated that according to the results of Saudi-Iraqi Telecom, the talks were good and successful, as the two sides stressed support for the efforts of the "OPEC +" countries through Iraq's fulfillment of production cuts and additional reductions in a way that enhances the stability of the oil market and helps accelerate the rebalancing of global oil markets, in addition, to send positive signals to the market.
In turn, Nayla Hengstler, Director of the Middle East Department at the Austrian Federal Chamber, said that "OPEC +" seeks to strengthen the positive aspects in the market in order to overcome at a faster pace the repercussions of the current crisis, as the bloc recently confirmed that there are encouraging signs of recovery in the global economy. He commended the efforts made by countries around the world to reopen their economies in a safe manner.
She pointed out that "OPEC +" has achieved very positive results so far amid the development of its joint cooperation, especially since it made record cuts in production to compensate for the loss of demand caused by the Coronavirus crisis, noting that this strategy has paid off, as crude oil prices have doubled three Times from its lowest level in two decades in late April to about $ 45 a barrel currently.
With regard to prices, oil rose yesterday, supported by Saudi optimism about Asian demand and an Iraqi pledge to deepen supply cuts, but the uncertainty about an agreement to support the US economic recovery limited the gains.
According to "Reuters", by 06:41 GMT, Brent crude futures were up 34 cents, equivalent to 0.8 percent, to $ 44.74 a barrel, while US West Texas Intermediate crude futures advanced 47 cents, or 1.1 percent, recording $ 41.69.
Both grades were lower on Friday, affected by concerns about demand, but Brent ended the week up 2.5 percent, while West Texas rose 2.4 percent.
"The weekend comments from Aramco are now the driver," said Michael McCarthy, market strategist at CMC Markets.
Amin Al-Nasser, CEO of Saudi Aramco, said yesterday that he noticed the recovery of demand in Asia, with the gradual reopening of economies following the closures to combat the Coronavirus.
"Painting a blossoming picture of the demand outlook in the Asian region," McCarthy said.
On the supply side, Iraq said on Friday that it would reduce its oil production by another 400 thousand barrels per day in August and September to compensate for production above the target in the last three months, which will help it to adhere to its share of the cuts of the Organization of Petroleum Exporting Countries and its allies, within the framework of OPEC + group.
On the other hand, the "OPEC" basket of crude fell to 44.87 dollars a barrel last Friday, compared to 45.17 dollars a barrel the previous day.
The daily report of the Organization of Petroleum Exporting Countries (OPEC) said yesterday that the price of the basket, which includes the average prices of 13 crudes produced by the member states of the Organization, achieved its second consecutive decline, and that the basket gained about one dollar, compared to the same day last week in which it was recorded. $ 43.02 per barrel.