The deal OPEC+ will work in the opposite direction: Russia and OPEC are preparing to increase production. It is reported, citing sources.
At the upcoming meeting in Vienna, Russia may offer OPEC to increase production to levels in October 2016, thus reducing if not all but most of the cuts. This was reported by Bloomberg citing a source.
Of the country from July will be proportionally to the increase in production of 1.8 million barrels a day.
It is difficult to say whether the information is true, but the upcoming June 22-23 meeting in Vienna can really bring a lot of surprises.
The problem is that some of the member countries of OPEC+ quickly increase production, but others are not, and there can be serious differences.
Indeed, according to available information, Venezuela, Angola and Mexico is unable to increase production. On the other hand, the increase in production will offset reduced production in Venezuela and Iran.
Saudi Arabia and Russia are trying to garner support to increase production in the group. Most likely, they’ll find some allies, but at the same time will meet resistance from a number of manufacturers, led by Iran and Venezuela, according to Bloomberg.
This means that the discussions at the OPEC meeting on 22 June is likely to be stormy. And Venezuela and Iran have already applied to the group with a written call for unity against external sanctions, Recalling article 2 of the Charter of the organization. Their actions are unlikely to persuade Saudi Arabia, which the US increasingly demand to increase production by a million barrels a day, or Russia, whose oil industry calls for easing of restrictions.
In General, the signals to increase production really is. They came from Russia, and Saudi Arabia. In addition, more and more countries concerned about the rapid rise in oil prices, because the expensive raw materials can slow the growth of the world economy.
Many countries are already sounding the alarm about the rise in gasoline prices. This problem is acute in Russia, Brazil and the United States. By the way, that is why the President of the United States, Donald trump turned to the Saudis to increase production, however, we do not know whether the American President has made such a request.
How fast Russia and Saudi Arabia can increase production?
On the assessment of the oil division of Gazprom, the free production capacity of the Russian Federation amount to about 500 thousand barrels per day. Rosneft, in turn, reports that can increase production by 100 thousand barrels in just a few days.
Saudi Arabia claims within 90 days to use spare capacity of around 1.5 million barrels per day.
In addition, according to secondary sources, in June, Saudi Arabia has increased production by 85.5 thousand barrels per day.