RIYADH SAUDI ARABIA (CU)_An agreement has been made by the major oil production countries to keep a steady oil flow as the pandemic if forcing governments to either go back into lock downs or to further continue their lock downs, which in harmful to all economies. All this whilst governments also face the struggle of distributing the vaccine to its people.
The Saudi Minister for Energy stated during a press conference that “We do that willingly and we do that with the purpose of supporting our economy, the economies of our colleagues,” This was as Saudi had decided to cut back on their oil production by 1 million barrels so that the countries had a lesser production of crude would have a chance to get a better share of the market.
In the light of this situation the crude oil barrel price has risen to a little over 50.00 USD per barrel from its usual 49.36 USD per barrel.
While it is shocking that Riyadh has taken the decision and offered to cut its production by 1million barrels the OPEC countries and its allies should be applauded for deciding to make decisions that will help all the economies that depend on crude oil production and supply.
With new strains of the virus being discovered in some of the larger economies in the world it is apparent that these countries will have to either go back into lock down or further continue their lock down. There is also the concern of vaccine distribution. There is the case of even the countries that have gotten the vaccine early enough still have trouble getting it to the people that need it the most.
Whilst most countries in the OPEC favored and supported the cause of rolling over the production of crude oil, Russia took a different approach and said that they would increase production by another 500,000 barrels daily. This statement was confirmed by Russian Prime minister Alexander Novak who also claimed that Moscow was looking at pricing the barrels between 45.00 USD – 55.00 USD per barrel.
It seems likely that there will be two fractions forming with in the OPEC + Group and this is a cause for concern, as the last time the group had such tension there was a short but sharp fight between Russia and Saudi Arabia for the market share.
