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Why does OPEC consider resuming the policy of "production reduction and price protection"

wallpapers News 2020-06-29

organization of Petroleum Exporting Countries (OPEC) secretary general Badri recently said that at the OPEC meeting held at the end of November, it is possible to reduce the production target to 29.5 million barrels per day in 2015 from 30 million barrels per day, reducing the daily production by 500000 barrels. This is OPEC's 180 degree turn in just over a month, it is also the first time since the 2008 financial crisis to reduce official production.

previously, OPEC, in its monthly report on oil market in July, optimistically predicted that global oil dem will continue to grow in 2015, with the total amount exceeding 92.3 million barrels per day, the growth rate will increase from 1.1 million barrels per day this year to 1.2 million barrels per day, it is believed that OPEC can meet the market dem. However, in late August, the U.S. Energy Information Agency (EIA) subsequently lowered the global oil dem forecast for this year next year, from 91.62 million barrels / day to 91.56 million barrels / day, the dem for next year was reduced from 93.08 million barrels / day to 92.96 million barrels / day, because of the weak dem for crude oil the downward pressure on oil prices.

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judging from the recent price trend of international oil market, the price of light crude oil delivered in October on the New York Mercantile Exchange fell by US $1.35 closed at US $93.07 per barrel as of September 18. London Brent crude oil futures for November delivery fell $1.27 to close at $97.7 a barrel after falling to a 26 month low below $97 a barrel, breaking below OPEC's $100 level.

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all along, the expectation of global oil dem the rise fall of prices can be used as one of the barometers of the world economy. The reason why OPEC changed its previous optimistic expectation planned to reduce production is that the prospect of world economic growth is not optimistic, the dem for oil has naturally decreased. Both the International Monetary Fund the world bank lowered their global economic growth forecasts for this year next year in their spring reports. Although the US economic recovery momentum is strong, some hard indicators are still not up to the stard, there are uncertainties even hidden dangers. Therefore, the president of the International Monetary Fund, Lagarde, recently expressed his worries about the global economic prospects.

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in addition to the uncertain factors of global macro-economic prospects, the factors leading to the reduction of oil dem recent price drop are geopolitical instability, regional armed conflicts, including the situation in Ukraine, the Middle East "Islamic state" issue, etc., which not only hindered the process of world economic recovery, but also reduced oil dem. At the same time, the European economy is still sluggish, the emerging economies in Asia Latin America show signs of economic growth slowing down or even declining due to structural adjustment or the continuous deterioration of the external economic trade environment. Energy consumption dem, including oil, has decreased to varying degrees. In this situation of declining overall dem, if we take into account the increasing part of shale oil gas production supply in the United States, it would be worse for international oil prices.

of Hebei Petroleum Industry Chamber of Commerce As oil is still dominant in the world energy structure, the fall of oil price means the decrease of energy cost in economic operation, which is very beneficial for oil consuming countries. Especially in the stage of global economic recovery, both macro real economy are eager to get low-cost energy support, so as to improve efficiency, achieve more profits get rid of difficulties. However, for oil producing countries, the direct consequence of the decline in oil prices is the reduction of income. The decline in profits of oil production enterprises will lead to a decrease in investment in reproduction. After a period of time, there will be a vicious circle in which the equipment cannot be updated, the output will decline, the income profits will continue to decrease. In the medium long term, this will do harm to the global economy, it will lead to a decline in production, dem will exceed supply, global oil prices will skyrocket. At that time, the economy of oil consuming countries will be greatly damaged. This article comes from hebbccpi.com In view of this, as the guarantee of global economic recovery stable operation, the oil price in the international market should be kept within a reasonable range, so that both producers consumers can bear have sustainability. Although OPEC Secretary General Badri's talk about production reduction this time is not large, it is intended to send a signal that it is possible to restart the "production reduction price protection" policy, not only to prevent the oil price from falling sharply, but also to keep the oil price within the range acceptable to all parties.


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