OPEC’s final verdict: will the oil-production cut be extended?
A veil of uncertainty still lies over the negotiations between the OPEC’s countries, Russia and the other organization’s external allies with regard to the extension of the previous agreement of reducing the oil-output for the upcoming months.
During the meeting, which will take place in Vienna on May 25th, the plan’s conditions regarding the period of the agreement will be tackled, and the plan will be reduced from six to three months, as well as the quantity of the oil amount-reduction which it is expected to be less than the one agreed on so far, since crude oil consumption picks up in summer.
Statistics reveal that the decision taken last January of 1.8 million barrels-cut per day didn’t turn out to be as effective as expected. In fact, despite OPEC countries’ high level of commitment, the goal of bringing the oil-stockpiles back to its last five years-average level hasn’t yet been met. It is acknowledged that the OPEC organization is struggling with oil surplus disposal and it doesn’t seem that the surplus problem will be solved anytime soon.
The effects of the OPEC final verdict is expected to immensely impact the prices of oil current contracts along with futures. We urge our clients to ensure they have enough free margin to sustain the volatility.
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