Iraq, Russia, and others fail to follow the OPEC + agreement

Almost two weeks have passed since the largest supply reduction deal in history. However, some OPEC Plus members have shown little commitment to the agreement. Iraq, OPEC’s second-largest producer after Saudi Arabia, still has negotiations with oil companies such as BP, ExxonMobil, Lukoil, and Ani. These international companies have a significant share in the country’s oil production. Still, so far, they have not agreed to reduce the Iraqi government’s proposed production. And the level of output in this country is still high. According to the agreement, Iraq must reduce its oil production by 23%, equivalent to one million barrels per day.

Furthermore, Nigeria has not fully complied with its production quota in Africa. The country, which has promised to cut 1.410 million barrels per day in May and June, plans to produce 1.56 million barrels per day in May. Moreover, it has plans for 1.65 million barrels per day in June.

According to Reuters, Russia, which has agreed to reduce its daily oil production to 8.5 million barrels per day, has produced 9.45 million barrels per day from the 1st to the 11th of May. However, reports suggest that the Republic of Azerbaijan and Kazakhstan are trying to reduce production following the agreement.

Business is at risk of bankruptcy

US independent analyst firm CFRA Research insists that the historic reversal in prices was a reminder of the tensions the oil market was facing and warns that June prices could fall again. Stewart Glickman, the company’s analyst, said that he is not optimistic about the prospects for oil companies.

There seems to be no doubt that it will have an impact on oil companies if the price remains at low levels for a long time.

According to Rystad Energy, in an environment of $ 20, more than five thousand US oil exploration and production companies will declare bankruptcy at the end of 2021. Even if the price of the oil were $ 30, more than 200 American producers would go bankrupt.

Analysts think that the volatility will be very high, and there is a possibility WTI to go negative again. The oil sector suffers one of the most significant cases in its history. Additionally, its recovery seems to be very low. The economic slowdown, the rise of clean energy, and geopolitical tension have the most significant effect on the sector.

On the other hand, Link Securities, an independent stock company, highlights that the price of crude oil has served as a wake-up call for many investors. It has made them reflect on the complexity of the socio-economic scenario that companies will have to face from now on.