The average price of crude oil is still around 45 dollars per barrel. Some experts believe that no further production cuts will managed to change the situation and make the prices reach new local highs.
According to experts from RusEnergy Consulting, the forthcoming OPEC summit scheduled for May 25, is probably going to end up with extending the Vienna Accord signed in November 2016. Still, the assume that this is not going to change the situation and reverse oil prices to make them skyrocket. They thing that 45 dollars per barrel is the price they have to count on for the rest of the year.
They say that there are 2 major reasons for that. To be more specific, the global demand for crude oil is lower than expected. The next thing to keep in mind is that other oil producers outside of the Vienna Accord do not follow the agreement and keep on producing crude oil like never before to make up for the production cuts and win an extra market share.
While Russia seems to be committed to implementing further production cuts, Kazakhstan, which has always been loyal to Russia, doesn’t want to follow. Iran, which is another major oil producer, is also reluctant to cut the oil production especially as Iran suffered from several years of oil embargo and is now trying to catch up with the lost profits. That’ why asking Iran for oil production cuts is useless.
At the same time, the experts still expect oversupply at least until early 2018. The agreement extension is believed to bring no radical changes even if it’s approved during tomorrow’s summit in Vienna, Austria. For now, the price of Brent oil has been fluctuating between 53,70 and 54,35 dollars per barrel.
