As I observed in my previous post, some members of
the OPEC+ are reluctant to go ahead with the anticipated hike in the production
of crude oil; prolonging the session for another day or even more, is a clear
sign that coming to an agreement in the current circumstances is easier said
than done.
It seems that Russia still believes that the
alliance can agree upon its proposed increase in production – 500,000 bpd.
Saudi Arabia, however, does not think that it is a
step in the right direction, especially at a time when the developed world faces an
unprecedented situation with the evolving Coronavirus; you just have to read
between the lines of what the Secretary General of the cartel, Mohammad
Barkindo, said on Sunday to sense the mood.
In short, the prospect of increasing production by
half a million barrels per day is in limbo as of Monday.
In another development, Saudi’s closest ally in the
region, the UAE, also wants to raise the production to a significant level in
the hope of increasing revenues for its many ambitious projects.
Amidst the uncertainty of the outcome of the OPEC+
at their latest meeting, there was a ray of hope on geo-political front: Kuwait
announced that Saudi Arabia was about to open up airspace as well as land and
sea borders to Qatar in a diplomatic breakthrough brokered by the US; Qatar’s
Emir, meanwhile, has accepted an invitation by the King of Saudi Arabia to
attend the meeting of the GCC, the Gulf Cooperation Council.
As the mixture of good and bad news makes ripples in
the markets, oil price may react with some fluctuations in the coming weeks.
Since most of the other factors that usually determine the oil price are in
favour of the current level, anything near to a crash is highly unlikely in the
short run.
