The price of oil below the barrier of US$ 50. In September, the average price of a barrel of Brent stood at US$ 46,19, according to the Trends Consultancy. With this, the price completed 13 months below 50$ , and exactly 2 years below US$ 100, whereas the monthly average.
This week, the Organization of the Petroleum Exporting Countries (Opec) – the group of 12 oil-producing countries, the majority in the Middle East – has reached an agreement to cut oil production by 5%, after negotiations strained in the midst of friction between Iran and Saudi Arabia. The production cut is the first of its kind since 2008.
The agreement made with that oil prices would rise in an immediate effect, but soon thereafter, investors began to question whether the measure will be enough to reverse the oversupply.
The agreement provides for a cut in production to be in the range of 32.5 million and 33 million barrels per day, compared to the current production of 33,24 million, according to the Reuters news agency. How much each country will produce should be decided at the next formal meeting of Opec in November.
See questions and answers on the fall of oil and to understand the effects on Brazil:
The price of oil is at the lowest level of the year?
No. In January of 2016, the oil price came to be$ 30 per barrel, the lowest since 2004.
At the time, which spooked the market was a heavy and unexpected increase in gasoline stocks in the United States. In addition, geopolitical tensions after the announcement of a test of the hydrogen bomb by North Korea have contributed to the fall of prices at the beginning of the year.
at The same time, the prospect of slower demand from Europe and Asia due to the lower growth of the economy in the world also has contributed to the decline.
how low oil affect Brazil?
the fall of The international price decreases and the collection of royalties on production, affecting the revenue of the municipalities and states producers. In addition, Brazil remains dependent on imported fuels to meet domestic demand.
Since 2011, the country returned to consume more than it produces, losing the self-reliance celebrated by Petrobras and by the government in 2006, when the production of oil is equated to the volume of derivatives consumed at the time in the country.
With oil prices falling, why the price of gasoline does not fall in Brazil?
With the fall in the price of oil, Petrobras started to sell fuel above the values of international reference. According to a survey by the Brazilian Center of Infrastructure (CBIE), the price of petrol and diesel in refineries national 12 months ago, above the outside.
Unlike the international market, Petrobras is fixed at its sole discretion and controller (the brazilian government) the prices of the fuels, with the argument search prevents transmit volatility to the consumer.
while Keeping the higher prices in the refineries, the state seeks to make up for the loss of revenue extraction – and recovers losses over 2014, when kept prices below the international, to prevent the passthrough to inflation.
But Petrobras also suffers with the depreciation of the oil, because it decreases the profitability of the projects of exploration in pre-salt, which have been planned taking into account a minimum price per barrel to around$ 45 for the production can be considered economically viable.
What are the most harmed by the fall in prices and who wins?
Some countries have suffered more from the reduction in oil prices, especially Venezuela, Russia and Iran, due to the large weight of exports of the commodity in their economies.
The countries that profit from the fall in oil prices are the major importers and dependent on oil, such as the Philippines and China, that can take advantage of the low prices to boost the economic growth or reverse the slowdown.
If there is excess oil in the market and the price is falling, why the production delay to be reduced?
On September 28, Opec reached an agreement to reduce its oil production. The production cut is the first of its kind since 2008. How much each country will produce should be decided at the next formal meeting in November. But, even after the agreement, investors question whether the reduction in the amount of oil produced would be sufficient to rebalance a world market with large excess supply of the commodity.
The Opec nations had rejected, in November 2014, the reduce your ceiling of production, regardless of the price in the international market. One of the objectives would be to discourage the production of shale oil (a substitute for oil) in the United States, whose extraction is more expensive.
Opec blames the great increase in the production of shale oil by low oil prices and has kept its production record, part of a strategy to prevent the oil taken out of the shale to reach more markets.
What are the difficulties in the agreement of reduction of the production?
tensions between Saudi Arabia and Iran stand out among the main difficulties of agreement in the Opec with the goal of reducing the supply to recover the price.
The economies of both countries rely heavily on oil. But, according to Reuters, in a scenario of a post-sanctions Iran is suffering less pressure on oil prices, which have fallen by half since 2014 and you can expand its economy by almost 4% this year, according to the International Monetary Fund (IMF).
as for Saudi Arabia, according to Reuters, faces a second year of deficit in the budget after a hole record US$ 98 billion – a stagnant economy and is being forced to cut the salaries of government employees.