What will Riyadh do for $ 80?

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According to official sources in OPEC, Saudi Arabia's new budget has been drawn up at the rate of $ 95 per barrel of oil. However, the Saudi authorities will be happy and $ 80 - $ 85, in this case, no longer have to use financial reserves.

To cover the estimated costs, the Saudis intend to cut crude oil exports by 800 thousand barrels per day from November levels. In December 2018, the kingdom sold about 7.3 million barrels per day outside its state, compared with 7.9 million recorded in November and 7.7 million in October.

The hardest hit exports to America. This plan goes beyond the commitments under the OPEC + agreements reached a month ago. Then the Saudis agreed to reduce production by 2.5% from October marks, starting in January, then the bar was raised to 3%. At the same time, the planned reduction in supply (an important component of the proposal affecting the global oil markets) as a whole will lead to a drop in the export figure by 7.8%.

Representatives of the cartel realistically assess the situation and recognize that new attempts to revive the black gold market are unlikely to bring the desired results in the short term. However, they allow the restoration of quotations to $ 80 in the second half of the year due to an increase in demand.

After the publication of The Wall Street Journal announced the plans of Saudi Arabia to expand the volume of export cuts, oil went up. By Tuesday, February Brent futures, trading at the end of December below $ 50 a barrel, nearly reached $ 59, adding about 8% in price. The WTI mark went up by 1.43% per day and by 11.6% compared to December 31, to $ 49.14 per barrel.

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Oil traders also hope for a positive outcome of trade negotiations between the US and China, which started on Monday. Completion of the "war of duties" will support the world economy and, as a result, the demand for raw materials.

The material has been provided by InstaForex Company - www.instaforex.com