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OPEC's Giants declare support for the New Deal



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After weeks of speculation, it is official: Russia, Saudi Arabia and Iraq have declared their support for an extension of the oil production cuts OPEC and its partners agreed in December last year to regulate worldwide offers and prices. Russia's President Vladimir Putin had announced the latest update before the OPEC meeting that began today in Vienna, saying that Russia had agreed with Saudi Arabia to expand the cuts by six to nine months. , of which OPEC should have cut 800,000 bpd. But with US sanctions against Venezuela and Iran, OPEC's total supply has reduced by much less: the energy database Kayross said earlier this month that the overhang was as much as 90 million barrels above average for 201

8. [19659004] The decision to expand the cuts is not very surprising. With relentlessly rising US oil production, OPEC has good measures again, if any. Russia has repeatedly noted that it would be happy with lower oil prices than its Middle Eastern partners, yet it has once agreed to continue cutting. Some saw in this a deal, where Middle Eastern partners – especially Saudi Arabia – would compensate Moscow for the disadvantage of having to sell less oil with investment contracts in energy and other sectors.

While oil prices jumped on the news, it remains to be seen whether this jump will turn into a full-fledged rally of the Middle East producers need to balance their budgets. Judging by the fact that they are unable to do so despite the cuts so far, the chances of Brent beating $ 70 a barrel, even less $ 80, are slim, especially as concerns about global economic growth persist. The US and China trade war remains the main driver of this concern, and even a recent announcement that the sites had agreed to restart could not do much for the oil price or general market sentiment.

By Irina Slav for Oilprice.com

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