OPEC+ agreed on a further reduction of oil production

On Saturday, June 6, OPEC+ agreed on a further reduction of oil production, reports Reuters citing the oil Minister of Iran Bijan Zanganeh.

According to officials, the agreement was reached, “as planned”.

The Agency notes that after OPEC+ (in a transaction involving more than 20 countries, including major suppliers of oil – Saudi Arabia, USA and Russia) in April agreed to cut oil production, supply of raw materials decreased by approximately 10%, and its cost in two months has almost doubled.

Zanganeh added that the main problem of today’s talks was the lack of compliance by certain countries, in particular Nigeria and Iraq. Those States have undertaken to compensate the quotas are exceeded, an additional reduction of production in July-September.

An agreement to reduce global oil production by 15% OPEC+ announced April 10. The agreement was reached a month after the termination of the previous transaction that triggered a record drop in the price of raw materials. By 9 March the price of Brent crude oil has fallen by 30% – up to $33 per barrel, the biggest daily drop since 1991, when the war began in the Persian Gulf. On 30 March the price of Brent crude fell below $23 a barrel.

However, due to a record fall in demand for raw materials due to the pandemic caused by this coronavirus and stop the industry the price of oil continued to fall. So, on 20 April the price of may futures of WTI for the first time in American history was negative – quotations fell to minus $40 per barrel. It also triggered the collapse of prices on the European spot market (prisoners in this market contracts are executed immediately). The estimated price of the Russian benchmark Urals oil fell to minus $3 per barrel of North sea benchmark Brent crude to minus us $3.5.

The level to record fall of oil quotations returned on 30 April, on the eve of the entry into force of the agreement OPEC+ about record reduction in oil production. In mid-may, OPEC said that the oil crisis is behind us.

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