CESD: “The situation with Qatar threatens to bring down oil prices”

CESD: “The situation with Qatar threatens to bring down oil prices”

Geopolitical tensions surrounding Qatar’s able to bring down the price of oil and to put an end to the agreement by OPEC and countries outside the cartel, to reduce oil production, said RIA Novosti economist, Chairman of the Center for Economic and Social Development (CESD) Vugar Bayramov.

On Monday, Egypt, Saudi Arabia, Bahrain and the UAE announced the rupture of diplomatic relations with Qatar, accusing Doha of supporting terrorist organizations and destabilize the situation in the middle East. Power Eastern Libya, Yemen and the Maldives and Mauritius subsequently also announced the severance of relations with Qatar.

OPEC and other oil producing countries at the end of 2016, agreed to cut oil production to total 1.8 million barrels per day from October level. The agreement was concluded for the first half of 2017, and at the end of may extended for another nine months — until the end of March 2018.

«The situation with Qatar is already reflected in the global oil market. Contrary to many expectations, we acknowledge the drop in oil prices. The reason for the decline are complicated relationships between the members of OPEC. There is a great risk that will put a cross on the agreement OPEC+ oil production decline and the obligations are not met,» — said the economist.

The expert believes that tensions surrounding Qatar’s divided OPEC into two camps.

«And this in turn will create an obstacle for monitoring the execution of the agreement OPEC+ oil production decline. On the other hand, can also be given up for ideas on additional reduction of oil production in large volumes in the future. It is also necessary to pay attention to the fact that the blockade of Saudi Arabia Qatar did not create problems for the second in oil export. That is, the market supply remains unchanged, but there are a number of psychological factors that, one way or another, affect the price of oil. If the export of Qatari oil will not reductions, in the not too distant future we will say the sharp drop in oil prices», — he concluded.

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