The past week began with talks that the OPEC + agreement on oil production reduction could be adjusted.

The main reason were the doubts of the participants about the expediency of the current terms of the deal due to the record drop in production in Venezuela. OPEC closely monitors the level of oil production in Venezuela, the situation in which will be the topic of discussion during the upcoming OPEC meeting in June. One source from the Reuters agency said that there is the possibility of adjusting the agreement if there is a shortage at the market. According to another source, OPEC is not yet convinced that amendments to the agreement on reduction of production should be made already at the forthcoming meeting. He also noted that adjustments, if necessary, can be made later this year.

Last week, the International Energy Agency (IEA) reported that oil production in Venezuela in April reached a minimum level since the early 1950s and may continue to decline. Markets expect that this factor, combined with a high degree of compliance with the OPEC + deal and the US withdrawal from nuclear arrangements with Iran, may limit the supply at the market.

Another important topic was the situation around Iran. US Secretary of State M. Pompeo, speaking at the non-governmental foundation of the Heritage Foundation, with a keynote speech on the policy of the US administration towards Iran, said that Washington is ready to exert unprecedented pressure on the country in the form of the most stringent sanctions in the history. The sanctions will only increase and become more painful, M. Pompeo promised. With active economic pressure, the US intends to put Iran ahead of the choice: either continue to sponsor military operations abroad, which the US regularly accuses Iran of, or stop doing it and preserve its economy. Also, M. Pompeo listed the accompanying tasks, which the State Department intends to solve jointly with the US Defense Ministry and Middle Eastern partners. Among these tasks are ensuring freedom of navigation in the waters of the region, preventing and countering Iran's hostile activity in cyberspace, neutralizing Iran's henchmen and the Hezbollah and other Shiite organizations controlled by them around the world.

Despite such news that supported the oil quotations, by the end of the week the world oil prices went down after the publication of the US Department of Energy statistics on the significant increase in oil reserves in the country. The cost of July futures for the North Sea petroleum mixture Brent dropped 0.48%, to 79.42 dollars per barrel, the price of July futures for WTI oil - by 0.4%, to 71.55 dollars per barrel. According to the US Department of Energy, commercial reserves of oil in the country, except for the strategic reserve, unexpectedly jumped by 5.8 million barrels to 438.1 million barrels. Analysts had expected a decline in inventories of 1.57 million barrels. At the same time, oil production in the country increased during the reporting period - by 2,000 barrels per day - up to 10.725 million barrels per day.
As a result, the week ended with a drop and new speculations about the agenda of the June meeting of OPEC +. During negotiations with colleagues from Saudi Arabia and the United Arab Emirates, Alexander Novak, the head of the Ministry of Energy of the Russian Federation, discussed the idea of increasing production by 1 million barrels per day. In other words, the scale of the contract to reduce production, which has been in force for 17 months, will be reduced almost twice - now it is 1.8 million barrels per day.

 

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