On May 25, OPEC will be meeting in Vienna to decide whether or not to extend the agreement to limit oil production. Are Russian oil companies going to insist on pulling out of the agreement and how is the oil price going to change by the summer?
We should not expect any changes in oil prices unless output is reduced significantly
"The agreement is going to be extended in one form or another. However, it is not at all a given that the currently agreed production level will remain the same," the Analytical Center expert Alexander Kurdin commented on the situation for a banki.ru correspondent. Since there is going to be a seasonal spike in the global demand for oil in H2, the total target output may be increased on the grounds that the increase in global demand has to be met, the expert noted. At the same time, Mr. Kurdin is of the opinion that Russian oil companies are unlikely to demand pulling out of the agreement because they are primarily interested in maintaining stability in the market.
"We should not expect any changes in the situation with the oil prices unless output is significantly reduced. However, if the agreement were to be abandoned, it would result in a serious glut in the market and the prices would collapse," the expert said.
It should be noted that the current agreement to limit oil production was signed in November 2016. In March 2017, the 11 OPEC members that signed it reduced output by 1.004 million barrels, down to 29.7 million barrels a day (on the level of last October).