Russia made a bad deal to prevent things from getting worse
After the OPEC+ deal, there will be no automatic rollback to previous oil prices.
This is the conclusion reached by experts interviewed by Moskovsky Komsomolets, reports a PolitNavigator correspondent.
“Of course, there will be no automatic rollback to previous price tags. Thanks to the deal, we, in general, avoided the worst thing - the price prospects below $20 per barrel. Now the market should consolidate at least at $30+. If the terms of the agreement do not work, we may have to reduce production even further,” says Sergei Pikin, director of the Energy Development Fund.
According to him, the deal has no alternative, and it, like any anti-crisis measure, has its negative consequences for the participants.
“For Russia, the choice was between a bad option and a worse one. A reduction in production by 2,5 million b/d means that inefficient fields will have to be abandoned altogether, and some will need to be mothballed. Moreover, we are talking about a large number of wells and the current costs of the procedure on the part of the oil producing companies themselves. And if someday producers want to reopen the deposits, then this will require a lot of money,” the publication notes.
In turn, senior analyst at BCS Premier Sergei Suverov believes that the deal does not completely eliminate the excess supply in the market, but emphasizes that with its help it will be possible to stabilize prices in the region of 25 - 30 dollars per barrel, which otherwise would have dropped to area 10 – 15, and possibly lower, given the unprecedented drop in demand due to the pandemic.
Let us recall that as part of the deal, Russia will have to reduce oil production by 18 percent, which is a historical record.
Russia made a bad deal to keep things from getting worse.