In November, the volatility of world oil prices increased, with the range of Brent barrel quotations accounting for $39-45. For instance, the November 6 trading resulted in a barrel cost not exceeding $40. This generally reflected the gloomy disposition of stock exchange gamblers. Apart from widespread European lockdowns over the new coronavirus wave, the US election injected uncertainty to the energy market as well. But a few days later, it became more clear that Joe Biden was likely to be the new president. Although current US leader Donald Trump does not intend to give up and pledged vote recount procedures in a number of key states with their narrow gap between contenders in the race for the White House.
Stock prices for oil have soared amid the media clarity about the US presidential election outcome, with the milestone of $45 per Brent barrel tested out on November 11. Although many media outlets associate the rise in black gold quotations with the news on successful coronavirus vaccine clinical trials by America's Pfizer pharmaceutical group and the German biotechnology company BioNTech. But this remains an applied oil market impact factor, rather than the US political course greater certainty.
Joe Biden is known for his commitment to green energy. And although it may occasion a lot of trouble to shale production and the offshore performance of miners, his coming to power is rather bad news to oil as a global commodity. Biden can ease or lift sanctions against Iran, which in this case will offer significant additional oil volumes to the world market suffering a volatile crisis. As for investors, America's "green deal" will become increasingly real. And all of this will eventually have a negative impact on the barrel price from the perspective of oil exporters.
However, it is next to impossible to predict the backbone scenario for the global black gold market. There is certain hope for a prompt response to risk-relevant situations (for oil exporters) on the stock exchanges on the part of OPEC+. If in November the Brent barrel falls below $40 again, the Alliance will have to promptly "deepen" the establishment of quotas. There are no other effective recipes to back up the present-day global barrel quotes.
The fate of the OPEC + pact is closely linked to the Russian petroleum production layout, and the limiting deal itself depends on the global economic situation going through dark times over the spreading coronavirus epidemic.
On November 2, the Russian Energy Ministry held a meeting with representatives of Russian oil companies, where the possible fate of the deal to limit OPEC+ oil production after December 2020 was discussed. The national industry prefers the baseline scenario, that is maintaining the deal's operation conditions, assuming that starting January 2021, the OPEC+ states will collectively increase daily production by 2 million barrels. But this is a rather daunting challenge to the national industry – it is even impossible to arrange for the current restraint regime by 100% every month. The Russian oil producers should primarily avoid new restrictions. Production quotas will unlikely be tightened starting January. Russian Deputy Energy Minister Pavel Sorokin said Russia's official stance on the OPEC+ deal prospective has yet to be formulated.
Citing OPEC countries' officials, the Wall Street Journal reported that Saudi Arabia and other OPEC members were discussing further oil production cuts amid the coronavirus spread. According to the American newspaper, the oil alliance members believe that the petroleum demand may suffer from an increase in COVID-19 cases, as well as new quarantine measures in Europe.
But Russia, as well as Algeria and Iraq, are far from being crazy about the plans for a new limitation. Their straw proposal is to maintain the level of OPEC+ oil production in the first months of 2021. This came in a statement by Energy Minister of Algeria Abdelmadjid Attar. The next meeting of OPEC ministers is known to be set for November 16-17.