Iraqi President Barham Saleh
Iraqi President Barham Saleh

Iraqi President Barham Saleh Thursday evening called on all countries producing crude oil to maintain the planned crude oil production level and overcome all obstacles, especially in light of the current conditions and the Corona crisis.

In a related context, the Iraqi President stressed during his meeting with the Minister of Oil, Ihsan Abdul Jabbar Ismail, "the importance of working to develop the oil sector and keep pace with the global market and maintain the level of production scheduled."

He pointed out the importance of "making efforts to optimize gas investment and improve the marketing policy adopted by the Ministry for crude oil to advance the economic reality in Iraq."

On the other hand, the oil prices in the global markets, at the present time, are living in a state of global price fluctuations, especially since they suffered a major setback due to the repercussions of the Corona pandemic, and the procedures and agreements that were followed by the Organization of Petroleum Exporting Countries (OPEC), Russia and other allies, are still a focus of attention Broad, especially with renewed hopes for a rapid recovery in demand for fuel, with the start of the gradual opening of economies around the world and easing the restrictions of confronting Corona, where some experts believe that such measures may contribute to the recovery of prices, which rose clearly after the OPEC + agreement to reduce production by 9.7 million Barrels per day, representing 10% of the global production volume.

On the other hand, some observers believe that the sustainability of price recovery may not continue in light of the deterioration of relations between Washington and Beijing, or the occurrence of a second wave of Corona injuries, as well as the return of US shale oil supplies to levels after the rise in prices, according to the German Press Agency. Analysts said in testimonies carried by some sources that the price hikes above the level of forty dollars a barrel will cover a large portion of the costs of American companies after they suffered bankruptcy risks over the past months and forced them to close production fields. Analysts pointed out that the continuation of the current price levels will enable American companies to resume stalled production, which reached about two million barrels per day by last May.

Barclays Commodities Research has raised its oil price forecast for the current year and next, with support from supply cuts to offset demand erosion caused by restrictions aimed at fighting the spread of the Corona virus. The bank raised its forecast for Brent and West Texas Intermediate futures contracts by between five and six dollars a barrel for 2020 and $ 16 a barrel for 2021. US crude prices tumbled to minus $ 40 last month due to storage-related problems at the Cushing warehouse in Oklahoma State. In the very short term, Barclays said, prices are likely to remain under pressure as the uncertainty surrounding the speed of the economic recovery remains high.

New agreement
In this regard, the Organization of Petroleum Exporting Countries (OPEC) agreed with its partners outside the bloc to extend the reduction of oil production for an additional month until the end of July. The decision was made at a video conference meeting. Observers hope that production cuts will contribute to the stability of black gold prices, after a significant decline in demand due to the outbreak of the Corona epidemic. The production cuts, since their implementation, have resulted in a noticeable recovery in oil prices, especially with the start of easing the closures imposed by the epidemic.

But Russian Energy Minister Alexander Novak described the market as "still fragile", calling on all countries participating in the agreement to abide strictly by its terms. OPEC said in a statement: "All participating countries agreed to the option of extending the first stage of the production cut process, scheduled for May and June, for an additional month." In the April agreement, the "OPEC" group and its allies pledged to reduce oil production by 9.7 million barrels per day from May 1 to the end of June, with the reduction in the amount gradually reduced from July by 7.7 million barrels per day until December. /December. According to the BBC.

Algerian Energy Minister Mohamed Arqab indicated that there is agreement that the amount of the reduction in July is 9.6 million barrels per day - 0.1 less than the reduction agreed in May and June. Erqab, who holds the current OPEC presidency, added that energy ministers from the major oil-exporting countries would meet monthly to evaluate the agreement. On the other hand, US shale oil producers started to reopen closed wells as prices recovered.

"American production is returning to the market and there is speculation that the massive increase in oil prices is killing the margins of the profits of the refining companies in Asia already experiencing difficulties," said Bob Youger, director of energy futures at Meizhou in New York. China, the world's largest oil importer, said its crude purchases hit a record high of 11.3 million bpd in May.

OPEC and shale oil
When OPEC and Russia and their allies agreed in April to cut oil production, none of them expected that initiative to raise collapsed oil prices would be supported by a rapid drop in US production. And now, after the recovery of oil thanks to these reductions from its level below $ 20 a barrel to more than $ 40, the group of countries known as OPEC + faces a new challenge of preventing American shale oil production from achieving another surprise by increasing at the same speed.

A Russian source familiar with the OPEC + talks said in this regard, "The plan is to adhere to prices between 40 and 50 dollars a barrel, because once it rises again, let's say 70 dollars a barrel, it will encourage more production, including US shale oil production." OPEC + sources said that Russia and Saudi Arabia reached a compromise in order to extend to July the current production reductions of 9.7 million barrels per day, equivalent to ten percent of global production.

These cuts were to continue during May and June, and begin to gradually reduce them. Two sources familiar with the OPEC + talks said that fears of a recovery in US shale oil production, which already showed signs of his return, were among the reasons that prompted Moscow to support prolonging the cuts to July instead of agreeing to a longer extension.