TODAY I WILL IMPROVE YOUR GENERAL KNOWLEDGE BECAUSE KNOWLEDGE IS POWER USE IT WELL
as you know that russia and saudi arabia are coming near these days
NOW A NEW OIL BROMANCE !
King Salman’s recent visit to Russia was the first ever by a Saudi monarch. With Russia facing a new set of sanctions from the United States on top of the 2014 coordinated sanctions with the European Union, Moscow appears to be exploring economic opportunities with an alternative group of partners, most notably China and India, but that group appears to be expanding to the Middle East and may include Saudi Arabia given the announcement of more than $3 billion in potential investment deals upon the King’s visit.
While the Saudi-Russian relationship may only be one of convenience – lasting as long as both partners believe the benefits outweigh the costs – for the moment at least cooperation appears to be mutually beneficial. The Saudis need a large oil-producing partner to effectively influence the market, and the potential for a greater geopolitical and economic role in the Middle East for Russia makes compliance to production cuts an expedient move for Moscow.
CPEC OR NON CPEC AGREEMENT:
In December 2016, OPEC joined with a group of non-OPEC countries to curtail crude oil output by 1.8 million barrels per day (mmbd) in a bid to rebalance the global oil market. The agreement marked a demonstrable change in tactics on the part of both Saudi Arabia and Russia, the leaders of the two groups. Saudi Arabia departed from its original plan to increase market share to reduce the impact of US shale production. For its part, Russia agreed to join the production cuts even though just two years earlier it openly questioned the relevance of OPEC in the age of quick-cycle shale oil. While the agreement did not explicitly state an intended numerical price target upon its announcement, secretary general of OPEC Mohammad Barkindo offered some clarity by stating that an unofficial quote of $60 oil had been used as an internal incentive within the group to garner supply restriction commitments. Moreover, Saudi oil minister Khalid Al-Falih stated, in May 2017, that the intended target was to reduce global petroleum stocks to their five-year average.
Russia, in becoming party to the agreement, made the commitment to cut 300,000 barrels per day of its crude oil production on a phased basis – less than 3 percent of total Russian oil output. According to the International Energy Agency (IEA), Russia achieved full compliance in August and cut production by 318,000 barrels per day in September. However, it is worth noting that Russia (along with the majority of other participants to the deal) ramped up production to historical highs in the preceding months to the agreement. Consequently, Russia actually exceeded 2016 crude oil production by 160 mbd for the first six months of 2017. Though monthly production volumes fell below 2016 levels for the first time in September 2017, on an annual basis, Russia has not made a market-share sacrifice while still enjoying the economic benefits of the price increase and the political advantages of being party to the OPEC/non-OPEC agreement.
Current IEA data indicate that the production cuts are successfully reducing global petroleum stocks. However, even if the cuts are realized through the end of their expiration in March of 2018, global stocks would remain elevated above the five-year average. With the 22-member party to the deal still cumulatively producing in excess of its commitment, doubts linger as to whether the agreement can ultimately survive or succeed in fully rebalancing the market. That said, Saudi Arabia and Russia appear to be doubling down on their commitment to see the task through, with King Salman recently visiting Moscow and announcing that the two countries will continue to work toward stabilizing the market. ...........!!!!
