Virtually no one has any doubt that the OPEC + deal will be extended. And nevertheless, the dates of the cartel meeting were postponed from June 25-27 to the beginning of July. On the postponement insisted energy ministers of Russia and Saudi Arabia. What can we infer? Indirectly, this indicates the continuation of backstage talks between Saudi Arabia and Russia on the conditions for the deal extensionand as well as the fact that the parties are not yet ready to officially announce their positions. Recall that earlier, it was Russia that gave an unequivocal messege to the whole world that joining the deal is not a goal itself, but only a friendly step towards OPEC, provided that Russia's other interests are taken into account.
The Minister of Energy of Saudi Arabia, Khalid al-Falih, expressed at the beginning of June, the general concern of the oil market participants about Russia's ambiguous position regarding joining the pact. He also stressed that the opinion of such an influential player on the oil market as Russia may influence the prioritization of many oil exporting countries and that Russia's support in this matter is an important condition for the successful extension of the deal.
All this happened against the background of a rapid decline in oil prices, which lasted from late April to mid-June. The quotes of the American WTI crude for this period dropped from 66.15 to 50.5 dollars per barrel.
It is interesting to note that as long as oil kept above $ 55, the opinions that the deal was not interesting for Russia and the market itself effectively controlled prices sounded pretty loud, but as the price approached $ 50, the voices for cooperation with OPEC began to prevail.
Also, it is important to understand that Russia's consent to support OPEC by itself does not give anything, since support will be effective only if the quotas for the production and sale of oil on the market are strictly followed. Thus, if the obligations assumed by Russia under the pact do not significantly reduce production, Russia will be in an advantageous position, having seized market share from other countries - cartel participants.
In fact, Russia's refusal to extend the deal would have a stunning effect on the market and could push the price below $ 50 a barrel. However, the extension of the transaction with quotas, which the market will consider not effective for the volume of production in Russia will have a less dramatic effect, but in the future will also push prices down.
It is quite clear that Russia is protecting the interests of its oil companies. Many Russian oil companies have invested in the development of new fields and want to start recouping investments as quickly as possible, and therefore, are not interested in OPEC restrictions. But we can understand the cartel interests either - without Russia's participation, the mechanism for regulating world oil prices will be much less efficient and difficult to manage.
The conclusion suggests itself - Russia will agree to compromise on the limitation of production, but at the same time demand some additional political concessions.
The unexpected exacerbation of US relations with Iran and the general political tensions in the Persian Gulf caused by the military attack on tankers once again supported oil prices and this week the WTI surpassed $ 55 per barrel and at the time of writing the article is trading at a level above $ 56. If prices hold out above 55 before the start of negotiations, then Russia's position is likely to become tougher again.