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Thursday, 3 May 2018

Saudi Arabia’s balancing act with the price of oil

Saudi Arabia’s balancing act with the price of oil:

"For Saudi Arabia, the rebound in the oil price over the past year has been a strategic triumph. Its diplomacy, including an entente with longstanding rival Russia, led to a late 2016 agreement between Opec and other large producers, restricting oil supply. The deal has supported the steady ascent of prices since last summer. Brent crude hit $75 a barrel last month, and is now at a level that will enable Saudi Arabia to cover government spending from tax revenues, after three years of belt-tightening. Oil producers should remember, however, that victory can sow the seeds of defeat. If prices are allowed to continue to rise, it would be damaging for the world economy — and ultimately counterproductive for producers, too. Crude has been driven higher by a combination of restricted supply, strong demand and international tension, with concerns about the future of the international agreement on Iran’s nuclear programme coming into focus most recently."

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