Right in advanced of the forthcoming OPEC+ summit some experts doubt that Russia is still interested in the agreement. The strategic objectives of the OPEC+ deal are almost reached. The imbalance in the global oil market has almost been eliminated. The cost of a barrel of Brent oil has increased by more than 100% since late 2016. At this point Brent oil is trading above 70 dollars per barrel. On Q1 2018, the OPEC made 400 million dollars a day more than 12 months before.
So, the participants of the oil agreement are going to discuss the future of the deal. Experts predict that most of the participants are going to advocate the idea of sticking to the deal at least until the end of the year.
previously, they discussed new levels related to oil inventories to automatically extend the oil deal of those levels are reached. At the same time, it’s necessary to work out and introduce the procedure of withdrawing from the deal since a rapid exit may well make the global oil market crash.
However, the voices advocating an exit from the OPEC+ deal are getting louder. For example, LUKOIL CEO Vahit Alekperov says that he is concerned about both very low and very high oil prices. If the prices get too high, they may eventually triggered a market crash, the way it was in 2014.
On top of that, Russia, which has been suffering from Western sanctions, has to get ready to respond. One of the possible measures is to withdraw from the oil deal and resume the production increase to undermine the American shale oil production.
There is one more key ting to keep in mind. If oil prices continue to grow, developed economies may well see inflation hikes., which will trigger monetary toughening and slow down the global economic growth.
