Posted on 04/04/2020 4:05:42 AM PDT by Oldeconomybuyer
Moscow (AFP) - Russia is ready to cooperate with Saudi Arabia and the United States to cut oil production, President Vladimir Putin said Friday.
Putin said Russia was willing to make agreements within the framework of the OPEC+ group and that "we are ready for cooperation with the United States of America on this issue," according to a statement published by the Kremlin.
"I believe that it is necessary to combine efforts in order to balance the market and reduce production."
Oil prices have tumbled in recent weeks in the face of a drop in demand and global economic uncertainty over the new coronavirus pandemic.
Last month, OPEC and its allies failed to reach a deal on oil production cuts after OPEC+ leader Moscow refused to tighten supply to counter the effects of the coronavirus outbreak.
Speaking with Energy Minister Alexander Novak via conference call, Putin said Russia was prepared to discuss "a reduction in the volume of about 10 million barrels a day, a little less, maybe a little more."
(Excerpt) Read more at france24.com ...
I learned over years that the markets aren’t really rational.
You need to count actual effect of the production cuts to determine what is better for your industries to displace your competitors and sell more at low price or to make cuts and sell less at premium altogether with the rest.
It doesn’t mean the markets would precisely follow your expectations.
They tend to overreact.
One thing for sure no matter how good it is to have a cheap gas oil shouldn’t cost $20. It simply drags the rest of the markets with it.
And if Trump wants foreign producers to cut production to bring price up it shouldn’t be used for unfair advantage of US producers. I am not saying their interests should be ignored but then they shouldn’t brazenly use the cuts Trump is asking for to replace foreign offer.
All in all even with dwindling demand in the absence of these feuds the price wouldn’t be that low.
True, but I don’t think those other “serious guys” win that game.
All that may not matter, because the fundamental problem is that demand is low: SA and Russia can cut production to try to raise prices to a place where they are comfortable, but then the US producers can compete and now SA and Russia are back to selling oil for, oh, $45 or $50 at lower volume than they were in 2019.
I agree, actually, but the problem for SA and Russia is that the US sets the price “roof” now. Say oil gets back to $45 or $50 a barrel, and SA and Russia are pumping 20% less when it all works out. Sure, I’ve argued here before that they can endure that for a while due to low production costs, but, they need higher profits than that in the long run, especially when demand is down.
A lot of this depends on how quickly COVID-19 is subdued, and how much the world economy rebounds, but the prospects for the world economy look rather bleak for some time, I think.
Could this be No. 10, it caught my eye on the 27th...
Yep.
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