As Christians around the world celebrated Easter attempts to resurrect global oil price remain in the balance.
OPEC leaders held a video conference last Thursday in an effort to end the disagreement between Saudi Arabia and Russia which had seen oil prices plummet. Opec is pushing in with a deal to reduce oil production by 10 million barrels per day as the Covid-19 pandemic sees demand dry up.
Saudi Arabia also hosted a meeting of G20 energy ministers in an effort to reach an agreement around oil production to better marry the levels with current usage. However, while publicly the sounds are all positive analysts believe that beneath the surface tensions are still high.
For US president Donald Trump the discussions with Russia are seemingly at an impasse. The fall in oil prices has seen many US shale oil operations halted with some firms close to bankruptcy.
President Trump would like the shale oil reduction to be counted within any US contribution to the reduction of output. Russia, however, is not willing to countenance such a move.
When asked whether the reduction in US shale oil output could count toward any proposed U.S. cuts, Kremlin spokesman Dmitry Peskov was unmoved.
“These are completely different reductions … It’s like comparing length and breadth,” he said.
Fears remain that oil prices will slump to $20 per barrel or lower, if a deal is not reached, but analysts believe oil production will fall with or without the agreement simply because of market forces as the price of a barrel falls below the costs of production.
The concern for many is just how stringent Russian demands will be. There are reports that it will demand US participation in the reduction efforts and a significant move by Saudi Arabia.
RBC’s Global Head of Commodity Strategy, Helmia Coft said: “If those are the Russian terms, this could really fall apart. And again, prices could go into the teens.”
She added that the market would not be surprised is Russia were to demand that Saudi Arabia uses January production levels as a starting point for any agreement ion cuts. This would in effect force KSA to reduce its output to lower level than if April production figures were used as the benchmark.