OPEC meets Sunday to decide whether or not to cut oil supply. For the past week, it’s been widely speculated that the group would announce cuts. As a result the price of oil lifted slightly during the week.
However, the members of the oil cartel are already publicly quarreling with each other about the fact that they haven’t been complying with the agreed cuts. On background one OPEC representative told Bloomberg news that they should make the already agreed to cuts before making an new cuts.
Here’s a look at what’s been done and what hasn’t been done already:
Bloomberg: Saudi Arabia had reduced crude production to 7.89 million barrels a day in February, or 166,000 barrels a day less than its target, the report showed. Iran was pumping 277,000 barrels a day more than its quota, meaning it had completed only 51 per cent of its promised reduction. Nigeria had completed 54 per cent, Angola 15 per cent and Kuwait 98 per cent.
“We have to insist on higher compliance of the cuts, which we believe has been good, but needs to be completed,” Venezuelan Oil Minister Rafael Ramirez said in a March 12 interview in Vienna.
Algerian Energy Minister Chakib Khelil repeated his view that OPEC should further cut output and adhere to quotas.
“The market has already taken into account 500,000” barrels a day of additional OPEC cuts, he told reporters in Vienna yesterday. Prices will fall if the extra reduction is not made, he said.
If the group cuts supply, expect a quick jump in the price of oil, but it wouldn’t necessarily be sustained. The price of oil is affected by a number of different things. Most importantly, it seems, the global demand for oil keeps shrinking and nobody knows when that will improve.
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