END OF OIL WAR
END OF OIL WAR
What just happened? 🤔
Saudi Arabia and Russia have struck a deal with other major oil producing countries to slash production as they attempt to stabilize a market that has been upended by the corona virus ( covid 19).
Members of OPEC and their allies including Russia and Mexico, announced that they have agree to cut production by 9.7 million barrels a day in May and June. The deepest cut ever agreed to by the World's oil producers: After that the group will steady ramp up production until the agreement expires in April 2020.
Now we will discuss about OPEC and OPEC plus countries.
The full name of OPEC is Organization of Petroleum Exporting Countries.
OPEC or OPEC plus including countries is Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Russia, South Sudan and Sudan.
OPEC is informal group of some countries and the headquarters of OPEC is in Vienna Austria.
Now here a major question rises in our mind is that why the countries will cut production?
One more thing I want to clear that here we talking about only crude oil not other type of oils.
Why will the cut production? 🙄
To impact the supply so that the price of crude does not fall too much.
The group, which together is known as OPEC plus had been secking to cut production in order to buoy oil prices which fell to 18years lows in recent weeks.
The drop came after Saudi Arabia and Russia abandoned years of production cuts in early March launching a price war by flooding the market with crude. The Corona virus (covid 19) meanwhile, dealt a devastating blow to energy demand, pushing prices ever lower.
When the deal is over then a tweet comes from US President Donald Trump.
Now again a new question is rises that why Donald Trump interested in this deal, The answer is --
Read the given data--
Top oil producers countries in world of 2019
The top three producers have in recent history been (alphabetically) Russia, Saudi Arabia, and the United States. Each of these countries experienced major production declines at different times in the past, but since 2014 all three have been producing near their peak rates of 9 to 11 million barrels per day.[2] Saudi Arabia and Russia also top the list of oil exporting countries, while Russia is not a member of OPEC. The monthly U.S. oil production reached 10.07 million b/d in November 2017, the highest monthly level of crude oil production in U.S. history.[3] In May of 2019, the country became a net oil and gas exporter, the first time since 1953.
The answer is simple, when we see data then we find that USA is top oil producing country in world, so US is interested in this deal.
Impact on 🇮🇳India🇮🇳
If prices remain at the $50 per barrel range for the rest of the year, India may save a whopping $22 billion in its impact bill FY21.
If it stays bellow $35 per barrel for the whole year then India saving could be beyond 30 billion US dollar.
If it stays $45 per barrel the import bill will stand at $74.11 billion and $66.09 billion at $38 per barrel.
Compare that with FY19's import bill of $112 billion and estimated $105 billion for FY20.
Oil prices expected to stay bellow 40 dollar mark at least.
"Goldman Sachs: Don't expect oil prices to rise on historic oil deal. "
Even though oil producers finally agreed to cut production by nearly 10 million bpd, the deal will fail to support oil prices in the coming weeks at agreement albeit historic is falling short of the enormous demand destruction and expectations, according to sachs.
Now a days we can see that the price of crude oil is bellow the zero US dollar. It's a very big news for the market value, it has collapsed to $0.01 per barrel..... it's first time in history which is unbelievable.
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