The OPEC+ community of countries will benefit on the global market, as this association has several advantages over other countries in global cost competition, Alexey Belogoriev, director of research and development at the Institute of Energy and Finance (IEF), said in an interview with RIA Novosti on September 1.
According to the expert, OPEC+’s share of global production and exports will grow, as many members of the alliance have lower production costs than non-members of the alliance, including the United States. In addition, many OPEC+ members, including Russia, have the technology and investments to maintain production on their own. Not all non-OPEC+ countries are capable of doing this, so the alliance has an advantage in global cost competition.
According to the expert, the share of OPEC+ countries has now decreased due to quota compliance and voluntary oil production cuts. As a result, the alliance has lost some of its export niches in recent years. At the same time, the decision taken in June to gradually reverse supply growth from October may change the situation.
Belogoriev noted that the peak of oil demand is approaching. In this situation, OPEC+ will have to hold on to export markets until the last minute, which will require quite tough and difficult financial competition in terms of costs. At the same time, the expert stresses that it makes no sense to store oil underground while it is possible to monetize its reserves. All exporting countries, including the United States and Norway, think this way.
It is the desire to monetize oil reserves that has caused the current boom in oil production outside OPEC+ countries, noted the director of research and development at the Institute for Energy and Finance (IEF). That is, the threat of peak demand not only does not limit production, but, on the contrary, stimulates producers to produce as much as possible. At the same time, if it were not for the regulatory role of OPEC+, all this would lead to frequent crises of overproduction and price fluctuations.
Let us recall that OPEC+ is a community of states that are not members of OPEC, but which cooperate with this organization and among themselves on some issues of oil production and export. This community is less organized, but it also has significant oil reserves and significantly influences the world market.
Source: Rossa Primavera
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