Doubts about the effectiveness of the meeting of oil-producing countries in Doha on April 17 caused the drop in oil prices on world markets.
As of 08:27 (MSK), the price of a barrel of Brent crude dropped 0.35%, reaching $42.68.
WTI oil prices dropped by 0.35% to $40.22 per barrel.
A significant majority of market participants believe that the decision to freeze the level of oil production following the meeting in Doha will be purely symbolic and would hardly help to achieve its objectives immediately against a background of a global oversupply of raw materials on the market, RIA Novosti reports.
A senior fellow at the Energy Policy Branch of the Institute of Economics of the Russian Academy of Sciences, Ivan Kapitonov, speaking with a correspondent of Vestnik Kavkaza noted that "today it is very difficult to assess the market situation due to the fact that those countries which are not included in the OPEC cartel often claim that they will continue increasing their oil production." "First of all, the US. And even the recent $10 increase in prices makes life for America much easier. As a result, they plan to further increase production," he explained.
"Accordingly, such information will affect future decisions. There are serious concerns that the sides in Doha will not be able to agree on a real freeze, because even if the do and even if Russia joins OPEC, the United States will increase its market share. However, if they are able to reach agreement with the US before the meeting in Doha and find a compromise with Iran and Iraq, which has been increasing its production during the entire first quarter, we may assume that everyone will sign a freeze contract to adhere to its rules," - the expert suggested.
"It should be born in mind that Russia does not adhere to a preliminary agreement to freeze output at January levels either. Russia increased its production by 3% in the first quarter. These are serious figures, which, on the one hand, demonstrate that there are opportunities to increase oil production. This is despite the fact that investments in exploration declined by 20% in 2015. However we managed to launch new fields in the end of 2015 and increase our production capacity by 3%, " - the expert said.
"If the parties agree, the level of supply and demand will adjust by June and the price will grow immediately , there is no doubt about it. Because it is a powerful news event," - Ivan Kapitonov predicted .
The deputy director of energy policy of the Institute of Energy and Finances, Alexey Belogoriev, pointed out in turn that "it's not about freezing of oil production, if we are talking about freezing of oil production at the level of 2015." "A decision was made to freeze it at the January level of 2016, when the annual production volume was significantly higher than in 2015. That is, the decision which has been discussed in the past few months concerned freezing oil production at the level of this year, not the last one," he said.
"This is a matter of principle for oil price fluctuations, since such a decision will leave intact that imbalance between supply and demand that we have been witnessing this year. From the market point of view, such a restriction can have an effect on the current state of affairs not earlier than in the beginning of 2017. Therefore, short-term investors and experts are quite skeptical about the effectiveness of the meeting in Doha," he explained.
"I think that they will fail to take more resolute measures to limit production, because there is no consensus. Iran is clearly not ready to limit its production, it will rather try to regain its pre-sanctions level, which is more than 4 million barrels per day. Against this background, Iran's competitors, in the first place, Saudi Arabia, see no point in large cutbacks in oil production," - the expert said.
"Many are satisfied with the range of $ 30-40 per barrel. It allowed even Russian companies to keep their operations stable during the last few years. Another thing is that this level creates very big problems for the state budget. But in any case, today there are only a few people who believe that it is possible to achieve the price above $ 50 per barrel," Belogoryev believes.
Speaking about the possible impact of the Qatari talks on the oil price, he noticed that "the increase of up to $ 40 per barrel, which we have seen, is a reaction to the meeting in Doha." "Therefore, if there are no new decisions, the price will slightly drop. I think that in the first half of the year the price will range between $ 30-40. It may increase above $ 40 in autumn. Overall, today the general market expectation is that the price will reach $50, but the year-average oil price will be below $ 50," – said Belogoryev.
Even if supply-demand ratio improves, it will have no impact on the market situation. "The general expectation is that it may happen no earlier than the first quarter of 2017, maybe later. In 2014, they believed that it will happen at the beginning of 2016, but it didn't. So I think that the discussion in Doha will be neutral in character, the sides will talk over matters that are well-known to them," Alexei Belogoryev summed up.
