As you know, OPEC+ was "meeting" today (on-line) in discussion on oil production cuts and throughout the day all kinds of "sources" continued to feed disinformation on the size of possible cuts in attempts to manipulate market. At some point of time the rumor of cut of 20 mbds even circulated as an information from some source "close to negotiations", right. I am also a source close to negotiations about quotas for mining beryllium on Saturn. But here is what is known so far and it seems to be real:
OPEC has succeeded. On Thursday, the OPEC++ group agreed, in principle, to cut 10 million bpd in oil production, according to media. But will it be enough? Today’s oil prices suggest not. As oil inventories burst at the seams and threaten oil prices the world over, the oil markets have been riveted by the Organization of Petroleum Exporting Countries’ (OPEC) actions as it relates to potential production cuts. While many analysts doubted that the group, and various other states who agreed to sit down with OPEC to hash out a new market stabilization plan, would cut as much production as would be necessary to draw down inventories, the group’s actions have never been more crucial to the survival of the entire oil industry.
Of course it is not going to be enough, but enough for who? You know the answer. And, in the end, the issue for US shale oil is not resolved and yet another discussion on cuts will be held at G-20 meeting. US shale oil to survive needs the price of crude to be, by different estimates, way in excess of $45. And this is an "optimistic" threshold. I am not an oil expert, never pretended to be, but I don't see this happening. You can see oil prices (almost in real time) here. So, sober opinions of people around US oil have been making it to media.
Many analysts expect a deal to cut production would have to involve the United States. According to his spokeswoman, Secretary of Energy Dan Brouillette will participate in the G-20 meeting, “to discuss with his counterparts around the world the urgent need to restore calm to global energy markets.”
So, the glut which Saudis created is here to stay for a while. Just as a reminder: Russia's budget was written with $40 price per barrel in mind and since then it was updated for even lower price. Per Saudis? I already expressed my opinion on that earlier last month and I may only reiterate:
That may help to explain why Saudis are going nowhere, because, as I write for years, tangibles win in the long run, and even if to imagine that somehow Saudis will survive next 4 years without consuming their $500 billion worth of reserves (sure, and I am Clint Eastwood) in the economy which produces next to nothing, Russia's National Projects will be already in their full steam and those are ranging from cutting edge research, aerospace, machine-building complex and other things of which Saudis have very little understanding.
So, the story continues and who knows when it ends. WTI still dropped more than 2% as of writing this, while Mexico altogether refused any cuts and, in fact, boosts output. So, let the real experts in oil/energy market excavate this pile of contradictory information and make sense of it.
Meanwhile, frigate Admiral Goshkov continues to test 3M22 Zircon and departed three days ago for Belomor Naval Base to be loaded with Zircons (in Russian) to continue with tests. As TASS reports, 4 more test-launches should be conducted by the end of this year. In general, the events unfold with such speed that, as I predicted, they throw me constantly off the track while writing a preliminary outline for my new book--it is simply impossible to grab the tiger by the tail. I am trying, though.