The market outlook for oil has changed for the entire year, as Saudi Arabia surprisingly unleashed a price war. Market experts at ING conclude that the OPEC oil cartel and other countries such as Russia with the so-called OPEC meeting on whether or not to lower oil production to support prices managed to surprise markets. However, they did it in a different way than expected.
After the collapse of the consultations, Saudi Arabia was there like the chickens to significantly lower its selling price for oil, resulting in a sharp fall in oil prices. In a new estimate, ING takes into account an oil price in the second quarter of this year of around $ 30 a barrel, whereas for the failed consultation by OPEC countries it was still $ 56 a barrel.
In the talks with the oil-producing countries, according to ING, the main thing was to keep Russia on board. But Moscow no longer wanted any further restrictions after they did support production restrictions. Especially since Russia does not want to lose further market share to the United States. In the medium term, the Russian strategy to put pressure on the US could soak, but in the long term, according to ING, the impact is uncertain.
According to ING, Russia needs a break-even oil price of around 50 dollars per barrel to stay afloat, while the Saudis need 80 dollars per barrel. Experts also think that lower prices are likely to have an impact on production, especially from the US. But this effect will probably be felt on the market later in the year and in 2021.
A barrel of American oil cost more than 30 percent less on $ 28.85 on Monday and Brent became 27.5 percent cheaper on $ 32.86.