Are there more signs of a chink in the Saudi armour over oil production?
OPEC’s effective leader has been softening its stance against cutting output. Reports now say it may support cuts, as long as they’re backed by members and non-members.
Hardly a revelation to catch the breath – but it’s being seen as a statement of intent to stabilise the market and raise prices.
Well timed too, just before Friday’s OPEC meeting in Vienna.
“We wouldn’t expect to see any change in production targets from this meeting. Clearly there will be ongoing concerns that perhaps there could be some degree of co-ordination between OPEC and non-OPEC members in terms of a reduction cut or perhaps even the various members of OPEC can lean on the big key producer Saudi Arabia to allow them to cut output,” said Jeremy Stretch, head of Foreign Exchange Strategy at CIBC.
Analysts say the Saudi approach has definitely changed – though a reduction will depend on the stance of several other major oil producers.
It’s thought a cut in output would only actually happen if Iraq agreed to do likewise, Iran also limited production once back on international markets, and non-OPEC member Russia cut output too.
Oil prices have more than halved since Saudi Arabia indicated it would keep production high to put pressure on higher-cost rivals such as US shale, Canadian tar sands and Brazil’s ultra-deepwater fields.