Thread by @anasalhajji

Thread on #OPEC and OPEC+ meetings today:
(Media: please feel free to quote)

1- What is the importance of this meeting? 1-

First, Deepening the production cuts from what was previously agreed upon for the month of July, which would accelerate the rebalancing of the markets

2- Second, the unprecedented focus on the commitment of all members & the establishment of a monthly monitoring system for the production of member states & the #oil market. This means that the possibility of a monthly renewal of the agreement exists if there is a need for it.

3- Third, establishing a new system used for the first time by OPEC: reduction of future production quota if countries violate their current quota. This system has been historically adopted by world commodity organizations such as the Tin, Bauxite a& Coffee organizations.

4- This means that countries that did not abide by their production quotas in May and June should reduce their production during the next three months by additional quantities to compensate for the increase they have made in these two months. #Oil #OPEC

5- What is the effect of extending the agreement to reduce production by 9.7 million barrels per day for another month?

answer👇

6- It reduces the surplus in global oil inventories by about 40 to 60 million barrels, compared to the non-extension and commitment only to the April’s agreement. Such an extension contributes to reaching towards market balance faster than otherwise. #OPEC

7- The historic OPEC agreement signed last April approved reducing production by 9.7 million barrels per day in May and June, and by 7.7 million barrels per day from July until the end of the year.
#OPEC #Oil #COVID19 #Shale

8- The difference between what will be officially agreed on today and the previous agreement is to deepen the reduction in July to be 9.7 mb/d instead of 7.7 mb/d. The difference is 2 mb/d over 31 days.

9- The bottom line is that the agreement that will be made today will make OPEC+ more flexible in dealing with market events on the one hand, and stronger due to the heavy focus on commitment adherence to production quotas.

10- This flexibility will be on both sides: reducing or increasing production, depending on the market situation. The issue of the growth of global oil demand is still obscure, so the new system allows dealing with any surprises quickly.

11- The importance of this development to the OPEC + system is that it can easily cope with the return of Libyan oil and others to the market in the coming periods. Therefore, what will be agreed upon today is a pre-emptive blow to these developments as well. #Libya #Oil #OPEC