Oil prices have fallen to a dangerous threshold: what will the OPEC+ meeting mean for Russia?

Producing countries decide how to raise the price of a barrel

The largest oil producers will meet again to determine the future of the commodity market. At the next meeting on October 4, the OPEC+ Monitoring Committee will give its recommendations for the final decision of the alliance. Most likely, it will be proposed to maintain the existing restrictions on hydrocarbon supplies to the world market by Russia, Saudi Arabia and other partners in the partnership. However, the intrigue remains. Over the past month, “black gold” has fallen significantly in price – its quotes fell below $90 per barrel. It is possible that the worsening price environment will force exporters to tighten the oil taps even more.

The current meeting of the OPEC+ monitoring committee is of a regular nature: at this site, experts discuss the situation on the commodity market and give recommendations on whether alliance members should change the parameters of the deal to limit supplies. At the same time, the committee has the right to propose convening an extraordinary meeting of delegations.

On the one hand, the majority of oil traders are confident that the committee will not rush and, as was the case at the previous consultation on August 4, will advise maintaining the established contours of the deal. On the other hand, several months have passed since raw material producers restricted the sale of energy resources and a sufficient number of events have occurred, including a fall in barrel prices.

Let us remind you: together with Russia, which voluntarily limited hydrocarbon supplies to 500 thousand barrels in early spring, OPEC+ countries removed approximately 2 million “barrels” of oil per day from the market. Saudi Arabia, Iraq, the UAE and Kuwait have limited their capacity the most. A little later, members of the organization began talking on the sidelines about extending the conditions until the end of 2024.

The maneuver worked: from the end of June, when the cost of raw materials dropped to $70, oil quotes managed to create an impressive market and by the end of September came close to the psychological mark of $100. However, already at the beginning of October, the price rally of the barrel stopped and its stock exchange values ​​fell back below $90.

A number of independent experts doubt that extending the current terms of the agreement will slow down the decline in the cost of raw materials. “After the announcement of the price ceiling on Russian oil and finished fuel in the eighth package of Western sanctions, as well as other prohibitive measures, our country has decreased the opportunity for foreign sales of energy resources,” explains Alexander Shneiderman, head of the sales and customer support department at Alfa-Forex. . “In turn, a decrease in the supply of hydrocarbons may give a chance for prices to rise. Both Russia and Saudi Arabia are inclined to believe that in order to maintain balance in the world market, it is necessary to use just such instruments.”

At the same time, there has not yet been a noticeable rush on commodity trading floors. The emerging trend towards a fall in quotations of “black gold” is explained by fundamental factors. Firstly, the disappearance of the threat of closing the federal government and the onset of a shutdown in the United States led to a strengthening of the dollar and a flow of stock investors into American financial instruments. Secondly, Europe has been hit by extreme heat this year: France, Austria, Belgium, Germany, Poland and Switzerland are experiencing their hottest September on record. Moreover, meteorologists warn that unseasonably high temperatures in the countries of the continent will continue into October. Although importers now continue to purchase fuel that is falling in price, it is logical that after stockpiling, their interest in fuel contracts will cool down. Thirdly, among the producing countries there are those who not only do not intend to reduce supply, but, on the contrary, intend to increase the shipment of raw materials. For example, Turkey announced the resumption of pumping through an oil pipeline from Iraqi Kurdistan that was stopped six months ago – previously up to 450 thousand barrels per day were exported along this route.

Considering the above circumstances, it remains possible that OPEC+ will not make drastic steps in the near future. “The alliance is not faced with the task of finally raising quotes above $100 – such prices can simply “kill” the consumer,” believes Markets Money Power analyst Sergei Ramaninov. — Russia and Saudi Arabia are trying to keep the price of “black gold” in the range of $80-85 per barrel. For our country, the market situation at the moment is favorable: there are sales points where raw materials can be sold at prices close to or even higher than the “ceiling” established by the West.

“Further increases in energy prices pose a risk of cooling the global economy, increasing the competitiveness of fields with high production costs, developing alternative energy sources and tightening the monetary policies of developed countries,” notes IVA Partners expert Artem Shakhurin. “An even greater reduction in production by OPEC+ countries risks losing their market share.” In any case, after the monitoring committee makes its recommendations, representatives of the mining organization will have enough time to thoroughly assess the feasibility of adjusting production volumes, since the scheduled meeting of all heads of OPEC+ is scheduled only for November 26.