Baku, Azerbaijan, May 7
By Sara Israfilbayova –Trend:
The further fate of the oil market will depend on the decision of OPEC+ on the extension of the deal on freezing production, Vasily Tanurkov, director of the Corporate Ratings Group at Russia’s Analytical Credit Rating Agency (ACRA), told Trend.
The director noted that much depends on the outcome of the US-China trade negotiations.
"The situation worsened last weekend after Donald Trump's decision to increase duties for Chinese imports from 10 to 25 percent in the amount of $200 billion and the threats of imposing duties of 25 percent on all other imports from China to the US," Tanurkov said.
He further noted that Trump’s decision could lead to the breakdown of negotiations, the next round of which was scheduled for May 8.
The expert believes that the escalation of trade war risks leading to a slowdown in the growth of the global economy and a corresponding slowdown in the growth of demand for oil.
The next important factor is the growth of production in the US, which will stimulate the commissioning of new pipeline capacities during the second half of this year, and further in 2020-2021.
"Average daily production in the US increased from 11.7 million barrels per day by late December 2018 to 12.3 million barrels per day as of late April. Production growth is expected to accelerate significantly as infrastructure problems are resolved and production can reach 13.4 million barrels per day by the end of this year," he said.
According to Tanurkov, the development of the situation around Iranian oil exports will also play a role.
"Exemptions from US sanctions for importers of Iranian oil were in force till May 4. A full-scale imposition of sanctions could lead to a drop in Iranian exports ranging from 400,000 to 1 million barrels per day at worst," Tanurkov noted.
