OPEC and its allies meet Monday in Vienna with near certainty that they will extend production cuts through at least the end of the year to support oil prices under pressure from slowing global demand and record U.S. production.
The Organization of the Petroleum Exporting Countries has kept output caps in place for much of the past two years in a bid to lift oil markets, which have consistently defied forecasts of imminent shortages and skyrocketing prices — even amid heightened tensions in the Middle East. Crude has already given back some of the gains that followed the recent downing of a U.S. drone by Iran, trading in New York at about $58 a barrel, some 20 percent below the $74 a barrel price a year ago.
The extension of the production caps is critical to the Houston oil and gas industry, which is feeling the squeeze from lower than expected oil prices, disenchanted investors and shrinking budgets. Analysts say that OPEC members have little choice but to maintain the combined production cuts of 1.2 million barrels a day or risk another crash in oil prices.
“This should be an easy one because everyone knows the alternatives are worse,” said Matt Reed, vice president of Foreign Reports, a Washington consulting firm focused on Middle East oil politics
The outcome of the semiannual meeting appeared all but assured over the weekend when Russian President Vladimir Putin and the de facto ruler of Saudi Arabia, Crown Prince Mohammed bin Salman, struck a deal at the G-20 meeting in Japan to extend the combined production cuts of 1.2 million barrels a day for up to nine more months. Russia and Saudi Arabia are the biggest producers in the expanded cartel known as OPEC+.
The agreement among all members, however, is unlikely to come…
Source: FuelFix
