If OPEC negotiations + on oil production are completely fail, the market may encounter a price war, writes CNBC. Analysts do not consider such a scenario most likely, but do not exclude this threat.
“In the coming deadlines, the absence of an agreement will obviously mean that everyone will be mining at its discretion and will be close to the price war,” said Alejandro Barbachos, Vice President Argus Media on the oil sector in the Middle East and Asia -Thokean region.
RBC Capital Markets Helima Croft strategist also predicts that in the case of a complete failure of the negotiations, “there is a risk of returning to a scenario in which everyone will play for itself.” In this case, the price will stop growing and start falling. “We do not think that it is very likely, but it is impossible to exclude this,” she stressed.
On the other hand, if OPEC + will not be able to agree on increasing production, then prices may grow against the background of a lack of supply, and in the end it will create a threat to the restoration of the economy. Oil will rise in price if the alliance decides to save the status quo, explained by the RBC Capital Markets specialist. However, the probability of rising prices up to $ 100 per barrel is so “politically opposed” for the United States, that the country’s authorities, according to the analyst, will “turn to key players to avoid fireworks” when continuing negotiations.
July 2, the organization of oil exporters (OPEC) and its partners could not achieve agreements on oil production due to the objections of the United Arab Emirates. In the UAE, they explained that they support an increase in oil production from August to the end of 2021, but disagree with the extension of the transaction parameters until the end of 2022. New negotiations are scheduled for July 5.
Preliminary agreements on the increase in production at the beginning of the month reached Russia and Saudi Arabia. This happened against the background of oil demand growth, which began to be fixed again due to the restoration of the economy after the pandemic. At the same time, prices and prices, which, according to specialists, can reach $ 100 per barrel.