Saudi Arabia’s flawed oil plan still the right one 15 Mar 2017 Cuts to production agreed with OPEC aren’t boosting the value of crude as hoped, or reducing global stockpiles. Shale in the U.S. is recovering too, and prices are moving sideways. The holding pattern is painful, but it’s still better than reversing course and letting oil plunge.
OPEC’s solidarity points to longer production cuts 14 Feb 2017 The cartel has taken two steps forward and one step back. Compliance with output cuts is narrowing the gap between supply and demand, but it is also encouraging U.S. producers to drill more wells. Sustained higher prices may require even more restraint to keep the market balanced.
Bets against Iraq’s OPEC cuts are premature 10 Jan 2017 Traders may have jumped the gun betting Baghdad won’t stick to an output deal. The cartel's second-largest producer has little to gain reneging on the pact and could struggle to maintain record shipments without investment. Higher prices help its cause more than extra barrels.
Maduro will survive, just, on Venezuelan tightrope 28 Dec 2016 The economy is a wreck, but the country's inept leader has probably done enough to avoid being forced from office in 2017, unless by fellow Chavistas. A bond swap and army-led food programs helped. His gutting of institutions, though, risks violence that may yet be his undoing.
OPEC resolve is strong enough to turbo-charge oil 30 Nov 2016 The cartel’s deal to cut crude output for the first time since 2008 ends its two-year-old policy of putting market share before higher prices. This may be self-defeating if shale production rebounds. But OPEC unity is convincing enough for oil to extend and sustain gains.
OPEC would be unwise to rely on demand to lift oil 29 Nov 2016 Saudi Arabia has suggested higher global demand may boost oil prices regardless of whether the cartel strikes a deal on Nov. 30 to cut output. That's optimistic. Banking on stronger world growth to soak up excess supply is a dicey strategy when protectionism risks are growing.
Saudi has Trump-shaped reason to reverse OPEC cut 15 Nov 2016 The new U.S. president may boost oil drilling, snub climate change accords and cancel a sanctions deal with Iran. That would give Saudi Arabia an excuse to back out of the cartel’s shaky pledge to cut output. Though prices would fall, Riyadh would hang on to its market share.
Oil prices are too gloomy on chance of OPEC deal 26 Oct 2016 Crude prices have wilted after Iraq joined Nigeria, Iran and Libya in seeking exemptions from production cuts. But this need not be the death knell of a deal to reduce output. Even a small reduction to production would balance a market that is now only narrowly oversupplied.
Iran’s upper hand in OPEC could be fleeting 28 Sep 2016 The Islamic Republic's resistance to an oil deal leaves its rival Saudi Arabia stuck with low prices. Yet that is pushing Riyadh to launch necessary economic reforms, which should make the kingdom more competitive. Iran, despite its current rapid growth, risks falling behind.
Saudi-Russian oil truce more mirage than reality 5 Sep 2016 Riyadh and the Kremlin make awkward allies. Competing economic and political interests in the Middle East have been hard for both sides to overcome, even for the mutually beneficial goal of higher oil prices. Their latest attempts at a crude truce will probably be only illusory.
Libya is the fly in OPEC’s ointment 31 Aug 2016 Whether the cartel can push up oil prices depends on Tripoli. Libya’s production is small but unpredictable. Include the war-torn country in any output cap, and other OPEC members may end up forced to produce less. Ignore it, and efforts to rein in production could be wasted.
Kuwait oil selloff success depends on reserves 12 Jul 2016 A plan to follow Saudi Arabia by partially privatising its state-run oil industry could make sense for OPEC's fifth-largest producer. An IPO would generate needed billions for the government. Maximising proceeds, though, will mean ceding control of the crude still in the ground.
OPEC has an oily blind spot over Brexit 2 Jun 2016 Britain leaving the EU would present the cartel with a tricky demand problem. Brexit could slow economic growth in Europe and reduce consumption of crude in the world’s third-largest market for fuel. If that happens OPEC may have to cut output, or risk prices falling again.
OPEC’s second coming can only start at the top 31 May 2016 Oil prices could get a boost if bickering members of the cartel can put aside their differences and select a new secretary general. Nigerian Mohammed Barkindo looks like the candidate most capable of getting OPEC functioning, and restoring its image among non-members like Russia.