OPEC Political Crises Threaten to Double Its Million-Barrel Cut - Bloomberg

OPEC Political Crises Threaten to Double Its Million-Barrel Cut - Bloomberg:

"The deal OPEC struck in 2016 to clear a global glut by halting a significant chunk of oil production took almost a year of bargaining and brinkmanship. By year-end, the group may have lost the same amount of crude unintentionally.

The Organization of Petroleum Exporting Countries is already cutting daily production by much more than its pledged 1.2 million barrels. Venezuela’s economic crisis is battering its oil industry and pushing output to the lowest level in decades, with a further decline likely. If U.S. President Donald Trump also reimposes sanctions on Iran, the cartel’s unplanned losses could swell to double the targeted cut.

That would pose a dilemma for Saudi Arabia and Russia, the leaders of the cuts agreement. Should they let the oil market get even tighter, but run the risk that higher prices hurt demand or spur an even bigger wave of American shale-oil? Or should they fill the gap by increasing production, but in the process unravel their historic agreement prematurely?

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