The OPEC meeting, which is expected to take place on Monday, was postponed to Thursday due to tensions between Russia and Saudi Arabia. With the postponement of the meeting, a sharp drop in barrel oil prices is expected.
The Cause of Tension
OPEC members have been cooperating “partially” without problems for several years and have been accommodating to agreements. However, everything changed when the Fire Nation attacked.
OPEC members proposed a cut of 1.5 million barrels a day in oil production at that critical meeting held in March. Countries like Saudi Arabia were among those who supported this cut. But Russia stated that it does not want to cut more. And at this meeting, no compromise was reached. (You can read the details here.)
With the tension between this tension between Russia and Saudi Arabia, Saudi Arabia took a radical decision. This decision was to increase oil production, to decrease barrel oil prices and thus to rest on Russia. Saudi Arabia started producing more than 12 million barrels a day in line with this plan (You can read the details here).
We know how this ended. Barrel oil price fell to the lowest level in 17 years. But towards the end of last week, the market started to recover a little.
It was beginning to fully recover
Vladimir Putin recently talked about the dispute with Saudi Arabia and announced that Saudi Arabia could cut 10 million barrels of oil production. On top of that, US President Donald Trump stepped in and said that this cut in Saudi Arabia could reach up to 15 million barrels.
On the one hand, Putin, on the other hand, said the oil market started to revive when Trump said “Saudi Arabia may decrease production”. The price of barrels of oil, which fell to $ 20, rose to $ 28 in a short time.
While everything went well, OPEC members were expected to hold a meeting on Monday. So everything was fine in the oil market. However, according to CNBC news, there was something wrong with this meeting.
With the intervention of the USA, this tension between Saudi Arabia and Russia started to ease slightly, but the tension increased again after the statements made on Friday.
In his statements Friday, Vladimir Putin accused Saudi Arabia of “breaking the three-year agreement”. In other words, he blamed Saudi Arabia for what happened in the oil market. On top of that, Saudi Arabia Energy Minister Prince Selman bin Abdulaziz made a statement and stated that there was no “truth” when Putin said.
Apparently, after these statements from both sides, it was decided to postpone the meeting on Monday. Now it is said that this meeting can be held on Thursday, but there is no exact date yet.
Postponing this meeting may have negative effects on the oil market. Because the reason for the market to start to recover was the tension between the two countries. However, the postponement of the meeting means that a drop in the price of barrels may still be experienced.
John Kilduff, manager of Again Capital, says the following about the barrel oil price:
“There was a great optimism on the market on Thursdays and Fridays. But after the conflict between the Saudis and the Russians, the market seems to be unable to recover. Probably it will collapse again. ”