Opec Agreement With Russia

Starting in 2014, U.S. shale oil production increased its market share; While other producers continued to produce oil,[11][12] prices rose from more than $114 per barrel in 2014 to about $27 in 2016. In September 2016, Saudi Arabia and Russia agreed on cooperation in oil price management and created an informal alliance of OPEC and non-OPEC producers, known as OPEC. Until January 2020, OPEC had cut oil production by 2.1 million barrels per day (bpd), with Saudi Arabia making the largest reduction in production. [13] Later, on 3 April, the Saudi foreign and energy ministers issued statements criticizing Putin and accusing Russia of not participating in the OPEC agreement. [38] Following the COVID 19 pandemic, plant production and transportation declined, which also reduced aggregate oil demand and drove down oil prices. [14] February 15, 2020, the International Energy Agency forecast that demand growth would fall to its lowest level since 2011, with growth of 325,000 barrels per day over the full year, to 825,000 barrels per day and a decline in consumption of 435,000 barrels per day in the first quarter. [15] Although global oil demand has declined, a drop in demand in Chinese markets, the largest since 2008, triggered an OPEC summit on March 5, 2020 in Vienna. At the summit, OPEC agreed to further reduce oil production by 1.5 million barrels per day by the second quarter of the year (an overall production cut of 3.6 million bpd from the original 2016 agreement), and the group is expected to review that policy on June 9 at its next meeting. [16] OPEC has asked Russia and other non-OPEC members to comply with OPEC`s decision. [13] On 6 March 2020, Russia rejected the request, marking the end of the unofficial partnership, as oil prices fell by 10% after the announcement.

[17] [18] The shocking drop in prices, coupled with pressure from President Trump, who was concerned about the loss of jobs in the U.S. oil industry, prompted Riyadh and Moscow to abruptly change their approach and resume cooperation. This contributed to the fall in oil prices at the end of April, when West Texas Intermediate Brut, the U.S. standard, fell negative, while Brent crude oil, the international benchmark, briefly fell below $20 per barrel. Under the agreement, members of the Organization of Petroleum Exporting Countries, along with Russia and other countries, will increase production by 500,000 barrels per day in January and possibly a similar amount in the following months. The increase, less than 1% of the global oil market, comes at a time when demand is still under pressure from the coronavirus pandemic. On March 8, 2020, Saudi Arabia launched a price war with Russia, which facilitated a quarterly drop of 65% in the price of oil. [1] In the first weeks of March, U.S. oil prices fell by 34%, crude oil by 26% and Brent oil by 24%. [2] [3] The price war was triggered by a breakdown in the dialogue between the Organization of the Petroleum Exporting Countries (OPEC) and Russia over planned oil production cuts in the midst of the COVID 19 pandemic.

[1] Russia left the agreement, which led to the downfall of the OPEC alliance.