Oil Prices Declining, Azerbaijan Ready to Reduce Production by OPEC+ Decision

World oil prices fell on February 10 by 20% compared with the peak in January due to China's weak demand for "black gold" in connection with the epidemic of the corona virus.

According to Reuters, traders are waiting for the decision of the Russian Federation - one of the largest oil producers in the world regarding the proposal of the OPEC+ technical committee to reduce the total world oil production by another 600 thousand barrels per day.

According to the data on the morning of February 10, the reference brand of oil, Brent, sold for $ 54.23 per barrel, and WTI - for $ 50.07 / barrel.

Oil brokers are at a loss as to how long the situation with the spread of the corona virus and the slowdown of the development of the world's strong economies due to this will last, which reduces their demand for fuel.

To date, the corona virus has claimed more lives (over 800) than SARS in 2003.

On Sunday, Algerian Oil Minister Mohammed Arkab said the OPEC+ Technical Committee advised oil-producing countries to reduce oil production until the end of the second quarter of 2020.

“The epidemic of the corona virus has a negative impact on the economic activities of many countries around the world, especially transport, tourism and industry,” Arkab added.

Russian Energy Minister Alexander Novak said that Russia needs time to assess the situation, noting that growth in US oil production will slow down and global oil demand may remain high.

“This week the market will wait for a response from the Russian Federation in order to understand whether OPEC+ will be able to prove itself as an initiative group of oil producers in the fight against the consequences of the corona virus,” said Harry Chilinguryan, an analyst at BNP Paribas.

Note that since January 2020, OPEC and non-OPEC have reduced production by 1.2 million bpd, but so far this does not save world oil prices from falling.

ACTION BY AZERBAIJAN

Azerbaijan is part of the OPEC+ consultation group and does not exclude a further reduction in its production, but is awaiting a final decision by the Russian Federation - the head of the group of countries outside OPEC (created in 2016 to interact with OPEC countries).

This was stated by Minister of Energy of Azerbaijan Parviz Shahbazov.

“Azerbaijan is likely to support a further reduction in oil production by OPEC and its allies if this step is necessary to balance concerns about oil demand due to corona virus in China,” the Minister said in response to questions from ASTNA.

OPEC+ producers are due to meet in Vienna on March 5-6, although this meeting can be rescheduled to February, depending on how the outbreak of the corona virus will further affect oil prices.

According to Shahbazov, the impact of the corona virus on the global economy may be short-lived.

“At this stage, the influence of the corona virus is temporary, and I do not see global threats, but I do not exclude that there may be further reductions in oil production,” he said.

According to Shahbazov, oil production in Azerbaijan last month amounted to about 770 thousand bpd, which corresponds to its quota in the OPEC+ agreements.

“We have a balanced 2020 budget based on an oil price of $ 55 per barrel, but it can withstand a temporary drop to $ 40,” the Minister said optimistically.

Azerbaijan’s economy is more than 70% dependent on oil revenues, which means that Azerbaijan will continue to closely monitor the situation around world oil prices.