Oil price depends on Doha meeting results
Economy14 April 2016, 16:12 779
Russia and Saudi Arabia have reached consensus to freeze oil output. "During the meeting between Russian and Saudi Arabian the concensus has been reached” APA reports citing the Interfax.
According to the source, Saudi Arabia has agreed to freeze oil output for the first time regardless of Iran’s position. Earlier, Saudi Arabia announced that not ready for the above-mentioned deal due to Iran does not want to join deal on freezing oil production. Note that Iran declared that is not going to join agreement to freeze oil output untill reaching level of oil production to previous level (before imposing sanctions against Iran).
Against the bacdrop of those oil price rise. But in general, which predictions promise these processes about oil price?
Head of Oil Research Center Ilham Shaban told "Kaspi” that increase oil price is due to the Doha meeting to be held on April 17: " On the eve of the meeting the sides, specially Saudi Arabia stressed that supports to freeze oil output and ready to realize it regardless of Iran’s position. Iran has been isolated since 2012. Consequently, Iran had to remove by one million barrels oil from the market and Saudi Arabia took its place. That is why there is tension in relations between Iran and Saudi Arabia. Currently, Iran officials noted that they will attend the Doha meeting only on condition that without restoration their position in global market it will not make a commitment to freeze oil output. However Saudi Arabia stated that if Iran does not come to a mutual agreement Saudi Arabia will take a step according to this.
According to Ilham Shaban, Russia and Saudi Arabia have already openly expressed their intentions: "It seems the both countries are going to join in order to boost oil price. Although, Saudi Arabia has not officially declared it, but Russia sends message to Iran via Saudi Arabia’s statements that they will reach agreement without taking into account Iran’s position.”
Touching upon Azerbaijan's position on this issue Ilham Shaban said that the Azerbaijani side has clearly stated its position on this issue from the end of last year: "In fact, while approving the draft budget for 2016 the government has mentioned a million of oil will be fallen down in comparison with the year of 2015. Moreover, it should be considered that Azerbaiajn is not a big oil country. With participation in Doha meeting we just want to show that we are not interested in drop of oil price and maintain to keep the fair price. Azerbaijan is interested in increase oil price. So, we will attend the meeting in Doha. Today we produce 700 thousand barrels of oil per day. However there is about 95 mln barrels of oil in global market.
I. Shaban also noted that, recently, rise in oil price is about highlighting of the Russian-Saudi Arabian agreement in media. If Doha meeting ends fruitlessly then it will impact negatively to global market immediately after the meeting. But if agreement will be reached, beginning of the next week rise in oil price will be noticed
Economist expert Perviz Heydarov also considers that oil price depends on the results of Doha meeting: "Real condition is that the largest oil producing countries are expected to reach an agreement on keeping the level of production the same as in January of this year. On February 16th, at a meeting between Qatar, Saudi Arabia, Russia and Venezuela in Doha the sides have reached a preliminary agreement on it. According to the deal reached at the February meeting the sides put forward a proposal to freeze oil production at the level of January of this year and invite other countries to join the offer. Despite all of these, it is possible that the sides may not reach an agreement at the Doha meeting: "The meeting will be held on Sunday in Doha with participation of 15 countries, both OPEC members and non-members hardly will come total and an unanimious decision. As Saudi Arabia has lost considerable market in connection with the production of shale in US. Iran tries to strengthen its position in the market after lifting sanctions. However, currently, oil price is increasing. Because inevitably there is a limit in the fall and rise in oil price. I suppose, the average price of oil in the current year will be between $ 45-48. Possibly, the price may fall till $30. But in general, the price of oil will be above $ 40 for the year 2016.