What to expect from OPEC+ meeting in July?
OPEC has agreed to move its next meeting to July 1, followed by a meeting with non-OPEC allies on July 2, according to new dates posted on the website of the Organization of the Petroleum Exporting Countries.
OPEC and allies were originally planning to meet on June 25-26, and have been debating for the past month on a new date for their upcoming meeting to discuss oil output policy, Reuters reported.
The compromise date was proposed by OPEC's current president Venezuelan Oil Minister Manuel Quevedo.
Russia and Saudi Arabia will discuss the output deal at a G20 meeting in Japan on June 28-29 before the gathering with OPEC.
Head of the State Duma’s Committee for Financial Markets Anatoly Aksakov, speaking to Vestnik Kavkaza, expressed confidence that the meeting will result in the extension of the output deal, while it is unlikely that the quotas will be changed. "I think that the summit's outcome will be an agreement on the prolongation of previous decisions on quotas in order to ensure price stability. The current oil price suits both consumers and suppliers," he explained.
"In my opinion, this line of preserving stability in the market should be continued. The market has experienced some fluctuations due to the situation in the Strait of Hormuz, but has returned to balance. If the market is quite stable, it expects the previous OPEC agreements + on quotas to be prolonged," Anatoly Aksakov stressed.
A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, agreed with Aksakov. "The agreement will be prolonged as its main participants - Russia and Saudi Arabia - said at the St. Petersburg International Economic Forum that they have no doubt that the deal will remain in force. It remains to agree only on specific production volumes, but this is a quick decision that will be taken directly at the summit," he said.
"Recently, there have been important changes, primarily in Venezuela and Iran. The United States is seeking to completely nullify Iranian oil exports, impose sanctions. It will become clear only before the meeting how much Iran has reduced its output and supply volumes. Venezuela is also close to resetting its exports due to both internal problems and U.S. sanctions. It is possible that the rest of OPEC+ members will not need to create additional restrictions because of these two reasons. At the same time, production quotas can be increased based on of the fact that the aim of OPEC+ is not only maintaining favorable oil prices, but also deterring the U.S. shale extraction. That is why the price of $60-70 per barrel is beneficial for the format, and prices above $80 per barrel - don't," Igor Yushkov noted.
"Since a significant role in such stabilization is played by OPEC+, no one has any doubt that this mechanism should be preserved. If they announce the termination of the OPEC + format, it will cause an instant panic on the stock exchange and the price drop to $30 per barrel," the expert concluded.