Photo: Hasan Jamali / AP
In the case of renewal of the agreement on the reduction of oil production volumes, the cost of a barrel of Brent by the end of 2017 could grow to $65
Despite increased U.S. shale oil producers, the average cost of a barrel of Brent crude oil in the fourth quarter of 2017 can return to the level of $65, reports Bloomberg, citing analysts at Citigroup.
According to experts, the increase of oil production in the U.S. can be offset by the extension of the validity period concluded earlier, OPEC and its allies of the deal to cut production.
“Focusing on the extension of the agreement OPEC and non-OPEC producers for the second half of 2017 and the expected reduction of oil reserves, we expect the second half of the year oil prices will rise above $60 per barrel”, — the forecast of analysts at Citigroup.
According to them, in the fourth quarter of 2017 the average price of a barrel of WTI crude oil could reach $62 per barrel Brent $65, about $10 above the current price level.
At the same time, experts at Citigroup have warned that the refusal of OPEC and its partners from the extension of the transaction will lead to a sharp drop in prices, as demonstrated in the end of 2016 producers the ability to significantly increase production “a cloud hangs over the market.”
In early April, Vice-Premier of Russian government Arkady Dvorkovich has acknowledged that the effect of the prisoner with the OPEC agreement to reduce oil production was less than expected the Russian authorities.
“Of course, we would like to reach prices of $55-60 per barrel. But the combination of factors gives us to do it,” — said Deputy Prime Minister, acting on total Board of Ministry
The agreement by OPEC and several non cartel countries about the decline in oil production came into effect from the beginning of 2017. However, up to $60 per barrel. the price of Brent crude oil over the past three months did not rise, and never even above $58 has been only one (3 January 2017). In the second half of March, the cost of a barrel of Brent remained stable below $55 and rose above $56 just after the missile attack on the United States airbase to the government troops in Syria. On Tuesday, April 18, the price of a barrel of Brent oil on the ICE exchange is around $55,3-of 55.5.
Dvorkovich noted that the deal with OPEC have improved the situation on the market, but to talk about the extension of the agreement yet.
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Later “Rosneft” has sent the Ministry a letter in which he called on to consider “the adoption of new and implementation of existing agreements with the OPEC countries” the dynamics of shale oil production in the United States and Saudi Arabia’s willingness to fulfill its commitments.
The authors of the letter, Rosneft warned that the situation in which Russia would be the only country that fully complied with their obligations “would lead to substantial losses for Russian companies and for the budget of the Russian Federation”.