After oil prices this week fell to their lowest level in four weeks, it is likely that Saudi Arabia will continue to cut production by 1 million barrels per day. day until spring next year, writes Financial Times (FT).
Ever since this summer, the country has contributed with cuts in production on top of the contribution from the rest of the group. Saudi Arabia currently produces around 9 million barrels per day, compared to the 12 million barrels that the country is capable of producing.
Increased anger
At the same time, a wider cut in the cartel is being discussed. Although the drop in oil prices is the main reason, many of the member states are indignant about Israel’s warfare against Hamas and the humanitarian crisis in Gaza. A further cut of 1 million barrels a day may be relevant, according to the FT.
“One should not underestimate how much anger there is, and the pressure the leaders in the Gulf states are getting from the population to respond,” says a source to the newspaper.
The source further says that there will not be a repeat of the oil shock of the 1970s, when the Arab countries cut exports to the West, but that it “will send a subtle message that is well understood both in the market and in Washington DC”.
President Joe Biden faces a difficult re-election next year and is already struggling to convince voters that the state of the country’s economy is healthy, writes the FT.
Steep fall
Oil prices fell as low as $77 a barrel on Friday, but rebounded slightly during the day. In September, the price reached a provisional peak of 98 dollars per barrel. Concerns over lower demand and a possible oversupply in the market have pushed prices down, despite support from Opec cuts and conflict in the Middle East.
Saudi Arabia, Russia and other members have already committed to cutting 5.16 million barrels a day, or about 5 percent of daily global demand
Reuters writes, citing sources, that the existing cuts may be too small and that the group will probably look at whether they can be increased at the next meeting. The ministers will meet in Vienna on 26 November.
2023-11-18 08:09:56
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