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Tuesday, 15 November 2016

Saudi has Trump-shaped reason to reverse OPEC cut | Reuters

Saudi has Trump-shaped reason to reverse OPEC cut | Reuters:
"Donald Trump may have handed Saudi Arabia an excuse to back out of a shaky pledge to cut oil output. Fears that the U.S. president-elect will supercharge domestic drilling, renege on global climate-change commitments and restore sanctions on Iran mean it is in the kingdom’s best interest to keep the spigots wide open.

The Organization of the Petroleum Exporting Countries (OPEC) is due to finalise a reduction in total production at its next scheduled meeting in Vienna on Nov. 30. The 14-member group wants to limit output to around 32.5 million barrels per day (bpd), compared with current levels closer to 34 million bpd, in a bid to revive prices which have tumbled 42 percent over the last two years. Saudi will have to shoulder the largest share of the cuts if that deal goes ahead.

But Trump’s victory has given the kingdom an opportunity to put its own interests ahead of OPEC’s and protect its share of the global oil market. The cartel’s decision to let oil prices fall two years ago has failed to deliver the hoped-for knockout blow to American production. The U.S. Department of Energy recently revised up its forecast for domestic production to 8.7 million bpd for 2017. Although that is about 1 million barrels fewer than last year’s average, it is probably more than Saudi would like."

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