As a result, developments were delayed, postponed or the expected investment was not made immediately. This was clearly against the interests of the host Government. The treaties did not provide for the renunciation of unenplored areas. In addition, traditional concession contracts were awarded to the OIL IOC “in situ” with market and price power. Royalties were fixed or fixed for unit rates and were sometimes set off against income tax. There was no or no small signing bonus and sometimes no income taxation. These conditions have often been “frozen” for the duration of the agreement. China, the world`s largest oil importer, has benefited from both the price fight and the deal. The drop in oil prices before the deal helped Beijing fill its strategic reserves, supporting the recovery of the Chinese economy, which is already heading towards the “exit strategy” of the coronavirus. Even after the deal, the price of oil is still favorable to the Chinese and Saudi Arabia has also given them big discounts to take advantage of the crisis to increase their market share.
The deal marks a new culmination in reciprocal gestures between Moscow and Washington — and Putin will try to use it to ease the isolation and sanctions imposed by the West on Russia. Fuzzy reports on dialogue between Trump and Putin indicate that they may have secured additional secret deals. The image of Putin and Trump acting together to stabilize the global economy against the common enemy – the coronavirus – reinforces Russia`s image as the world`s leading power. Finally, the revival of OPEC+ and the stabilization of oil prices have (already) ended the Russian-Saudi divide and reminded Middle Eastern leaders that Russia exerts influence on their economic stability. The group, known as OPEC+, first proposed Thursday to cut production by 10 million barrels a day — or about 10 percent of the world`s oil supply — but Mexico refused the amount it needed to cut and withheld the final deal. Under the new agreement, Mexico will reduce 100,000 barrels per day, instead of its initial allocation of 400,000 barrels per day. The deal is a compromise between all sides and reinforces the view that Russia and Saudi Arabia have acknowledged that their bellicose attack on the price of oil in March was a strategic mistake that hurt them in the U.S. oil industry. Washington, Moscow and Riyadh, each for its own reasons, see the agreement as a key political achievement that goes beyond its economic aspect. Sunday`s deal follows a busy week for oil ministers.
On Friday, the Group of 20 held a separate virtual meeting to discuss the state of global oil markets, raising speculation that more production cuts may be possible. (The G20 includes producers like Canada and the United States…