WASHINGTON (Pakistan Point News / Sputnik - 08th April, 2020) The United States based its latest oil price estimates on the assumption that the OPEC+ production agreement will not be implemented, the US Energy Information Agency (EIA) said in a report on Tuesday.
OPEC+ is set to hold a meeting on Thursday to discuss the possibility of reducing oil production in order to stabilize the market.
"Despite recent news of OPEC+ emergency meetings within the next few days to discuss production levels, without an agreement actually in place, EIA assumes no re-implementation of an OPEC+ agreement during the forecast period," the EIA said. "If there is ultimately an agreement, this forecast will incorporate that information into its ensuing release."
In the report, the EIA estimated that Brent crude oil prices will average $33 per barrel in 2020, $10 per barrel lower than in last month's outlook. April's forecast, the report added, is subject to the heightened levels of uncertainty due to the coronavirus outbreak.
"The COVID-19 pandemic has caused significant changes in energy fuel supply and demand patterns," the EIA said. "Crude oil prices, in particular, have fallen significantly since the beginning of 2020, largely driven by the economic contraction caused by COVID-19 and a sudden increase in crude oil supply following the suspension of previously agreed upon production cuts among the Organization of the Petroleum Exporting Countries (OPEC) and partner countries. Similar uncertainties persist across EIA's outlook for other energy sources, including natural gas and electricity."
A spokesperson for the Russian Energy Ministry on Tuesday told Sputnik that Russia will participate in Thursday's OPEC+ meeting.
In early March, the OPEC+ member states' discussions on the matter failed, as the participants did not reach a consensus either on Russia's proposal to simply extend the OPEC + deal to make a more balanced decision later, nor on the idea of Saudi Arabia deepening production cuts by 1.5 million barrels per day. As a result, restrictions on crude production have been lifted since April 1. Together with the impact of the COVID-19 pandemic, it led to a significant drop in crude prices over the past several weeks.
Last week, Russian President Vladimir Putin expressed the belief that Saudi Arabia's withdrawal from the OPEC+ deal, as well as subsequent oil production increases and declaration of readiness to provide discounts, were a reason behind the global oil prices dramatic decline. The leader added that oil production could be reduced by about 10 million barrels per day, but this may be achieved through joint efforts only.
