Saudi experts told Asharq Al-Awsat that extending the recent OPEC+ agreement to reduce oil production to the current level of 9.7 million barrels per day for an additional month would contribute to rebalancing the global markets.
They noted that the price of a barrel of oil could rise above $50, provided that countries commit to implement all provisions.
Experts emphasized that the price increase would depend on overcoming the repercussions of the Covid-19 outbreak and restoring the barrel price to the pre-Corona period.
Dr. Rashid Abanmi, an expert in the oil sector, told Asharq Al-Awsat that the expected results of the extension of the OPEC+ agreement were significant, compared to the results of the previous agreement, in which the price of oil reached about $40 per barrel in a very short time.
Therefore, with the extension of the agreement, the price of the barrel is expected to gradually touch the ceiling of $70.
Abanmi linked this increase to four main factors, including the countries’ “commitment, the need for oil, the incentives, and external factors.”
“The agreement depends on mutual trust rather than the presence of a monitoring and inspection mechanism to implement the agreement. This may lead some countries not to commit due to the presence of many incentives in the global markets. Those might increase some of the production quotas that they have committed to, for reasons related to financial needs,” the oil expert told Asharq Al-Awsat.
Abanmi stressed the need to anticipate external factors, such as another wave of coronavirus, which will force countries to completely shut down their economies, or a conflict between two oil-producing countries.
But he expressed hope that stability of the oil markets would be restored if all measures were applied.