The meeting of oil producers in Qatar on April 17 follows a gathering in February between Saudi Arabia, Qatar, Russia and Venezuela in which the quartet tentatively agreed to cap their production at January’s level.
Saudi Arabia will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince Mohammed bin Salman said Apr. 1
"If all countries agree to freeze production, we’re ready," bin Salman said in an interview with Bloomberg. "If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.”
Smirnov went on to add that if all the oil producing countries are somehow able to agree to keep the oil production level, oil prices can respond to this event and rise, but then the prices will fall again and remain at the level of $40 per barrel.
The expert said that it is necessary to reduce the production for the oil price to begin increasing and the world economy growth is required to increase oil consumption, but this is not expected yet.
“The economy of the largest oil consumers is in stagnation, while oil-producing countries are not willing to reduce the production,” he said.
Smirnov said that Iran will be a destabilizing factor in oil prices.
He recalled that Iran has repeatedly said that it will increase the production volumes to regain the market share that it lost following the sanctions.
"Of course, all oil producers are interested in a high oil price,” he said. “But it is necessary to take into account that if the oil prices greatly increase, the Americans will once again increase the shale oil production."
“While reducing oil prices, Saudi Arabia was combating the US shale projects,” he said. “So, the efforts will be made to keep the oil price at $40 per barrel, maximum $ 50 per barrel. As a result, shale production in the US will not be observed in the previous volumes.”
"Moreover, the low prime cost of oil in Saudi Arabia allows working at such prices," Smirnov said.
The North Sea Brent oil price reduced up to $39.52 per barrel following Saudi Arabian Prince’s statement. Previously, the price was $40.3 per barrel.
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