The economist Ahmed bin Hamad Al-Nuaimi presented a picture of the “oil price war” between Saudi Arabia and Russia. How does he see the markets? Who is the winner? And what about the positions of US President Donald Trump?
Al-Naimi stressed that the most difficult stage in the oil price war is after the current March, when the implementation of the agreement to cut production that existed between OPEC countries and major producers led by Russia, or what has become called “OPEC Plus” will end.
“We will not see any controls from producers who will be disbanded during next April, which will flood the markets with more production, and then further decrease in oil prices,” he said, noting that the markets will witness a real confusion.
Oil prices caught their breath in today’s trading, following a series of declines, after a three-day selling wave pushed it to its lowest level in nearly twenty years, while expectations indicate that this increase remains temporary due to weak demand against the backdrop of the effects of the Corona virus.
Difficulty in negotiations
Al-Naimi said that it was Russia that rejected the proposal proposed by Saudi Arabia, so the ball is in its court to settle the situation.
The economist appeared convinced that there are great difficulties in resolving the dispute between Saudi Arabia and Russia. He said that “settling the dispute has become very difficult, and the success rate may not exceed 15%.”
He stressed that even if Russia, Saudi Arabia and other countries return to negotiations to find a solution; The markets will have seen oversupply that takes time to be absorbed.
Al-Naimi analyst did not rule out that the oil producing countries need to further deepen the production cuts more than had they been agreed at the last meeting of OPEC Plus members two weeks ago.
Who is the loser and the winner?
Although Al-Naimi confirmed that the oil price war is a “loser-loser” war without winners, he seemed convinced that Russia would not be able to match the offer made by Aramco to sell oil to the markets at a price of $ 25.
And Brent crude prices fell to less than $ 25 before rebounding somewhat, while US crude fell to its lowest level in 18 years, before recouping some of its losses, but remains below $ 25 a barrel.
Al-Naimi said that the Saudi offer is very tempting, which will prompt dealers – countries and brokers – to request more Saudi oil for storag