The presidents of the USA and Russia, Donald Trump and Vladimir Putin, gathered a few days ahead of the producer’s alliance to review the OPEC+ deals and the forecasts of incoming cutbacks in the crude production.
Last Monday, the Kremlin stated about the conference between both presidents that the multilateral agreement backed by the American and Russian leaders had been leading to a slow-paced rise of oil demand and price stability.
In some days, the Organization of Petroleum Exporting Countries will meet with partners, including Russia, to deliberate whether to broaden or narrow the oil-production cuts. While it is to bee seen of the restrictions recede from July 1, the national production remains grounded. Trump has unofficially backed that deal, thus potentiating the spread of low prices and scarce demand.
The OPEC restricted the production to an unprecedented number of 9.7 million barrels per day in May and June in response to the lower demand following the pandemic outbreak and lockdowns. Added to these cuts, Saudi Arabia and its neighbor allies have introduced constraints of their own. According to a delegate, the curbs could stay at historic minima for as long as a quarter.
Although crude prices have climbed more than expected lately, the risk of a second coronavirus wave is looming on the horizon. To make it worse, the $35 per barrel price is insufficient to cope with the government spendings for most OPEC+ countries. The ongoing rebound momentum may not provide enough inertia to stabilize the market in the long run.