Effectiveness of the OPEC+ policy

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to RIA Novosti and the Prime news agency on the current OPEC+ policy effectiveness.

The OPEC+'s policy of increasing oil production, which helps lower prices and displace players with more expensive oil production costs from the market, should last at least 1.5-2 years to have an effect, Alexey Belogoryev said.

"This small price war that OPEC+ has unleashed, as I call it, can only be effective for a sufficiently long period. It's pointless to run it for six months or a year. In order for it to have an effect, it is necessary to maintain relatively low prices on the market for at least one and a half to two years, preferably longer. Then, indeed, the loss of the most expensive part of production in non-OPEC+ countries may begin. That's exactly what the bet is on," the expert said.

Belogoryev believes that the excess of supply over demand for oil is "obvious," but it is premature to talk about specific figures. It is difficult to evaluate even the past periods, since generally accepted statistics are needed, which appear with a long-time delay.

According to him, this is necessary, as there is a real risk that prices will go to $ 50 per barrel by the end of this year or the beginning of next year. And this will deal a blow, first of all, to shale production in the United States. On Friday, the price of the December Brent futures held slightly above $61.

He added that two factors are hindering the further decline in quotations. The first is the relatively low commercial reserves of oil and petroleum products in many countries, although China has a surplus: this year it accumulated reserves "with incredible persistence and speed." The second factor is geopolitics, in particular, the constant intimidation of sanctions against Russia, Iran and Venezuela by the President Donald Trump administration.