Major oil companies think of price cuts as trade war affects prices



DUBAI (AFP) - Major oil producers plan to cut production at a meeting this week, but analysts doubt they could boost oil prices as a result of a trade war between the two countries.







The cartels of OPEC's oil exporters and key members who are not members of OPEC want to prevent a drop in supply and price imposed for Venezuela despite previous production cuts and restrictions.















Analysts say the OPEC + Joint Ministerial Monitoring Committee, which oversees the supply shortfall deal last year, has limited options when it meets in Abu Dhabi on Thursday.







The obvious approach is to deepen the cuts.







Analysts say that if it can help with prices, there could be further loss in market share.







Kuwait Financial Center (Markaz) research head R. "OPEC has traditionally used production cuts to increase prices," Raghu said.







"However, this has led to a decrease in OPEC's market share in the global market from 35% in 2012 to 30% from July 2019," he told reporters. AFP. .















The group of 24 OPEC + countries, dominated by the Saudi cartel king and OPEC's production giant Russia, agreed to cut production in December 2018.







This occurred when a falling global economy and a US oil shale oil boom threatened to create a global supply surplus.







Previous reductions in supply have been mainly successful in price reinforcement.







But this time, the market continued to decline, even as OPEC + agreed in June to extend the previous agreement for a period of nine months, reducing production by 1.2 million barrels per day.







Commercial war







The new factor is a trade dispute between the world's two largest economies, whose tariffs are expected to cause a global slowdown that will reduce oil demand.







Saudi economist Fadal al-Buenain said that the oil market is "very sensitive to the US-China trade war."















"What happens with oil prices is beyond OPEC's control and certainly stronger than its capacity," Buen told AFP.







"As a result, I think OPEC + will not resort to further production cuts" as it will reduce the group's already shrinking market share, he said.







The European Brent benchmark traded at $ 61.54 per barrel on Friday, up from $ 75 in the same period last year, but from $ 50 at the end of December 2018.







The deliberation also coincides with the disrupted production of Iran and Venezuela and the slow growth of US production, meaning that supply is not very high.















"The pace of growth in oil production in the United States is not like previous cycles, and OPEC production is at its lowest point in 15 years, with 2.7 million barrels per day free fall nine months ago," Standard Chartered last month . .







"We believe oil policy options for major producers are limited for now," the investment bank said.







No decision will be made at Thursday's meeting, but the recommendations are expected to be produced before the OPEC + summit in Vienna in December.







The Rapidan Energy Group said the alliance may need to cut production by another million bpd to stabilize the market.







But the problem will be to decide which member countries will bear the burden of any further deficiency.







Saudi Arabia, which is actually the leader of OPEC and extracts about a third of the world's oil, last time acquired more than its share.







Buen said he felt that Riyadh would probably be more difficult this time, given the impact on Riyadh's revenue.







Raghu said the main factor on oil prices was weak demand due to trade tensions between the United States and China.







"Without a conflict-friendly settlement, OPEC's production cuts would not significantly increase oil prices," he said.

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