₦airaland Forum

Seems some relief is on the way.

Saudi Arabia, Russia to Freeze Oil Output Near Record Levels



Russia, Saudi Arabia Freeze Oil Production: What’s Next?
Qatar, Venezuela also agreed to freeze, asked others to follow
Saudis will consider 'other steps' to improve market: Naimi
Saudi Arabia and Russia agreed to freeze oil output at near-record levels, the first coordinated move by the world’s two largest producers to counter a slump that has pummeled economies, markets and companies.
While the deal is preliminary and doesn’t include Iran, it’s the first significant cooperation between OPEC and non-OPEC producers in 15 years and Saudi Arabia said it’s open to further action. Oil pared gains after the accord was announced, signaling traders see no immediate end to the global supply glut.


The deal to fix production at January levels, which includes Qatar and Venezuela, is the “beginning of a process” that could require “other steps to stabilize and improve the market,” Saudi Oil Minister Ali Al-Naimi said in Doha Tuesday after the talks with Russian Energy Minster Alexander Novak. Qatar and Venezuela also agreed to participate, he said.
Saudi Arabia has resisted making any cuts in output to boost prices from a 12-year low, arguing that it would simply be losing market share unless its rivals also agreed to reduce supplies. Naimi’s comments may continue to feed speculation that the world’s biggest oil producers will take action to revive prices.
“The reason we agreed to a potential freeze of production is simply the beginning of a process” over next few months,” Naimi told reporters. “We don’t want significant gyrations in prices. We don’t want a reduction in supply. We want to meet demand. We want a stable oil price.”

Prices Fall
More than a year since the Organization of Petroleum Exporting Countries decided not to cut production to boost prices, oil remains about 70 percent below its 2014 peak. Supply still exceeds demand and record global oil stockpiles continue to swell, potentially pushing prices below $20 a barrel before the rout is over, Goldman Sachs Group Inc. said last week.
While Novak has said he could consider cuts if other countries joined in, Russia faces significant obstacles to doing so. The freeze is conditional on other nations agreeing to participate, Russia’s Energy Ministry said in a statement.
“This is an announcement of a production freeze among countries whose production didn’t even grow recently,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “If Iran and Iraq are not a part of the agreement, it’s not worth much -- and even then there is still a question of compliance.”
Oil erased gains in London after rising before the meeting amid speculation the countries would discuss production cuts. Brent crude fell 0.2 percent to $33.30 a barrel at 1:52 p.m. in London, having earlier climbed as much as 6.5 percent.

Production Gains
Iran, OPEC’s fifth-largest producer, ruled out any curbs on its oil production when the group met in December. It plans to boost output and exports by 1 million barrels a day this year following the lifting of international sanctions last month. This week the nation loaded its first Europe-bound crude cargo in four years.
“Iran will not forgo its share of the market,” the Oil Ministry’s news service Shana reported Tuesday, citing Minister Bijan Namdar Zanganeh.
Iraq continues to boost production as it recovers from years of conflict and under investment. The nation’s output reached a record 4.35 million barrels a day in January and more increases could follow, according to the International Energy Agency. The country is prepared to cap production at current levels, or even cut, if other producers commit to the Doha accord, said an official from who asked not to be identified because oil policy is private.
Iran Concession
There is a precedent for some countries being excused from full compliance with a freeze in order to secure their backing. In 1999, when OPEC came together with other producers including Mexico to fight an oil price slump, Saudi Arabia agreed to let Iran fix output at a higher level than in the past.
The freeze deal comes after months of competition for market share between Russia and Saudi Arabia. Riyadh has taken the rare step of selling crude into Moscow’s backyard of eastern European, while Russia overtook Saudi Arabia in oil exports into China. The two nations are also backing opposite sides in the Syrian civil war.
According the IEA, Saudi Arabia produced 10.2 million barrels a day in January, below the most recent peak of 10.5 million barrels a day set in June 2015. Russia produced nearly 10.9 million barrels a day in the same month, a post-Soviet record, according to official data. Venezuela pumped 2.4 million barrels a day and Qatar produced 680,000, according to the IEA.
Qatar will lead monitoring of the output freeze agreement, the nation’s Energy Minister Mohammad bin Saleh al-Sada said at a press briefing. Low oil prices haven’t been positive for the world, he said.
"A freeze would not create an immediate U-turn, but it creates a better foundation for the price recovery in the second half," Olivier Jakob, managing director of consultant Petromatrix GmBh, said in a note to clients.

Source: http://www.bloomberg.com/news/articles/2016-02-16/saudi-arabia-and-russia-agree-oil-output-freeze-in-qatar-talks

Not optimistic about the future even if oil sold at $150 per barrel.

The budget of corruption exposed APC as a party interested only in looting.
Buhari budgeted nearly N2bil with oil at $28, how much would Bubu budget with oil at $50?

I really hope all parties involved can abide by the agreements they have entered, trust is needed for any production cuts in the future to be successful.

Is this really possible?

Like, really possible.

And even at that, does it favour us?

I'ld have welcomed the competition though. It would encourage us to look inwards.

Once the oil price is stabilized, trust all self-improvement plans to go down the drain.

That good news from outside, when are we getting good news from inside ?

Let's prays that this leads to increase in oil price

We neeeeed this and then a reduction for a rebound in the price.

When they finally cut output, will it eventually make N1=$1 under Buhari's government?

I doubt

A few questions- Will opec freezing output help us sell crude? Will it bring us new customers? Will it help us refine our own products? Will it prevent the US from increasing its own output? Will it make us a manufacturing nation? If you can say yes to any two of the above, we can rejoice. Otherwise this news only helps currency speculators and commodity fund managers.

aloeman15:
A few questions-
Will opec freezing output help us sell crude?
Will it bring us new customers?
Will it help us refine our own products?
Will it prevent the US from increasing its own output?
Will it make us a manufacturing nation?
If you can say yes to any two of the above, we can rejoice.
Otherwise this news only helps currency speculators and commodity fund managers.

Well a rebound in oil prices will bring us respite and a possible chance to start on a clean sheet. Good a thing that this downturn occurred in the rea of social media and huge politocal awareness of the citizenry. With advent of any boom henceforth I believe the masses will be more involved as to know how the government spends proceeds from commodities we shall trade.

Hmmmmmm

Does freezing output equate with an increase in prices? Meanwhile how many major producers agreed to this? Remember that the main idea is to prevent the US from gaining market share, as well as some international beef between nations- Saudi, Syria, etc.
Anyway, those who know say the downward trend will continue so our gist here is mostly academic.

Freezing output at current levels is a first step or trials to more serious commitments. Like the article says it waters the ground for the second half of the year.
As regards the U.S a look at rig counts shows as at last week it was 513 rigs expected to drop to 50 year lows by next 1-2 weeks. Non opec supply mainly U.S is already dropping.

We can only hope that differences are kept asidw and the players pull this through.

But why on earth should we hope for an increase in crude prices when this is the best- and likely only- time we can diversify?

The moment prices are high enough, everyone heaves a sigh of relief and we suspend diversification.

A serious nation would have been implementing several parts of an emergency economic blueprint simultaneously, 6 months into a new govt. But we're yet to have a new year budget!

Is this then why we should hope for a rise in prices- because we really can't diversify?

Especially with the current insanity in the power sector?!

Hmm, I hope this move will increase the price

aloeman15:
But why on earth should we hope for an increase in crude prices when this is the best- and likely only- time we can diversify?

The moment prices are high enough, everyone heaves a sigh of relief and we suspend diversification.

A serious nation would have been implementing several parts of an emergency economic blueprint simultaneously, 6 months into a new govt. But we're yet to have a new year budget!

Is this then why we should hope for a rise in prices- because we really can't diversify?

Especially with the current insanity in the power sector?!

I had said it earlier elsewhere, that once prices pick even the president will recant his words and tell you how Heaven picked him to be president at such a time, then there will be a little sitting a little folding of the hands and we will abandon every thoughts of a "diversification". Look at it this way, high oil prices are a blessing, but some countries (ours as a prime example) will never want to be cured of the resource curse and economically, the dutch disease.