“Frozen” production rumors helped the largest oil-producing countries to earn $32 billion

Almaty. April 22. Silkroadnews – Rumors that oil production “is getting frozen” triggering rise in quotations, helped the largest oil-producing countries to earn another $32 billion of additional revenue for 2 months, RBC states.

“Even if oil producers didn’t seal the output freeze deal they hoped would stabilize the market, they saw revenues soar earning $32 billion of additional revenues in the run up to the failed meeting in Doha on 17 April, Bloomberg analysis show based on the estimates by the International Energy Agency (IEA),” the report says.

The newspaper reminds, there was a 29 percent advance in prices since word first leaked that Saudi Arabia and Russia were considering capping output.

“Brent oil gained about $10 a barrel to about $43 in the two months leading up to the Doha talks. The price hike added about $3.7 billion to the value of Russia’s oil production, and another $3.3 billion for Saudi Arabia, the U.S. oil saw an extra $3 billion, while Canada got a $1.5 billion boost,” the authors of the calculations say.

According to them, now there are 2 factors supporting the quotes. First, the U.S. oil production fell to 8.95 million barrels a day for a week, according to the US Energy Information Administration data. This is the 12th decline in 13 weeks.

Second, the market got encouraged by the news that the leading oil-producing countries’ meeting, which is expected to give a new impetus to consultations on “freezing” production, shall be held next month and not in June as it was expected earlier. It has been reported, the members of the Organization of Petroleum Exporting Countries (OPEC) and other producers could hold a meeting in Russia in May.

According to Angus Nicolson, analyst at IG Ltd., tracing the positive trend in the oil price dynamics, especially within the context of the Doha agreement failure, the level of $40 a barrel seems to look as a new stable minimum, if the prices fluctuate above it within next week or two.

Meanwhile, on Thursday Abdalla El Badri, Secretary General of OPEC, said at the international oil summit held in Paris that the high level of oil reserves is a problem that OPEC should solve in cooperation with other oil-producing countries. According to him, around 75% of commercial reserves surplus are concentrated in North America. This year the oil market will continue rebalancing, while the exploration and production costs of the world oil companies will decline by 15%, the Secretary General says.