Exporters wait for US oil reserves to come to zero

The participation of Iran in the freezing of oil production will be discussed in March during the meeting between the head of the Russian Ministry of Energy Alexander Novak and his Iranian counterpart Bijan Zangeneh.

Some exporters fear that oil prices may drop again, unless exporters fail to reach an agreement. Pravda.Ru asked an expert opinion from the head of the sector of economy and finances of the Institute of Energy and Finance, Sergei Agibalov.

"The key point here is the state of affairs in the oil industry in the United States, where oil production has been decreasing, but not rapidly enough, as other market participants would like them to. The situation with oil reserves is not clear. There is a trend for US petroleum reserves to reduce amid the growing demand and low gasoline prices on the domestic market. At the same time, oil reserves grow. This is the good news and the bad news, but the market needs certainty," Sergei Agibalov told Pravda.Ru.

The situation with Iran was difficult from the beginning. The country has returned to the market after a long period of sanctions, and its leaders would like to have a special position on the market.

In an anticipation of production cuts, the price per barrel rose to $40 and still remains at this level. Although this price is not good for most market members, all fear that it may go down again, which is highly undesirable for all market participants.

"Saudi Arabia and Russia initiated the meeting and achieved some agreements. This is an important signal, because producers still hope that the situation will eventually stabilise. We have heard tough statements from Saudi Arabia recently that producers with high costs should be removed from the market. Now we can see some steps being taken towards coordinated actions," said the expert.

According to Sergei Agibalov, Iran may significantly increase production.

"There is no clear answer to this question either, as no one knows the real state of affairs in the Iranian oil industry. We do not know what Iran wants - either the overall growth of the market, higher oil prices or the growth of its volume.

If market members fail to reach an agreement to freeze oil production and Iran continues enlarging its oil exports, oil prices may fall again to $25 per barrel. However, it will be a short-term decline. Demand and supplies on the oil market will stabilize by the end of the year," the expert said.


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Author`s name Dmitry Sudakov