Saudi Arabia, allies willing to cut oil production if others follow

Discussion in 'Commodities Forum' started by Rainman, Dec 4, 2015.

  1. Rainman

    Rainman Senior Investor

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    Despite all that talk that production wouldn't be cut even oil prices dropped to $20, it appears like gulf countries are beginning to feel the effects of low oil prices and are willing to cut production so the prices can go up a little. But they have some conditions. They'll only cut production if Iran, Russia and Iraq join them.

    http://www.marketwatch.com/story/sa...ut-oil-production-if-others-follow-2015-12-02
    Will Russia and Iran play ball? That remains to be seen.
     
  2. crimsonghost747

    crimsonghost747 Senior Investor

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    Of course they are feeling the effects, especially the countries who rely on oil for the majority of their income.
    But yeah, they won't be backing down unless the others do the same and as we know OPEC is no longer a functional entity so I doubt an agreement will be reached anytime soon. But yes, eventually there has to be something done because these countries NEED the oil price to be higher than it is currently.
     
  3. baudwalk

    baudwalk Senior Investor

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    One and done. Today's meeting of the squabbling OPEC members ended with no agreement on production levels, much less a reduction, with ministers walking out with "no comment" from everyone concerned. The next meeting is scheduled for June 2016. The sanitized press release is here -- http://www.opec.org/3193.html -- and no doubt oil drillers in non-OPEC member countries will be challenged at ~$40 per barrel. In the US, states dependent upon oil for tax revenue will likely be challenged. Let's hope unemployment doesn't rise. While drivers will continue to enjoy relatively low gasoline prices, another kink is injected into the forthcoming December 16 FOMC decision.
     
  4. crimsonghost747

    crimsonghost747 Senior Investor

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    Yeah it seems that the main countries behind this are not yet satisfied with the effect low oil prices will have. I'll admit that I'm a litte surprised, I expected them to want to end this towards the end of the year. Guess they haven't caused enough trouble for the western oil companies yet.
     
  5. anders

    anders Well-Known Member

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    OPEC knows that as "fracking" technology becomes more sophisticated, they are less able to hold the world to ransom over oil prices. Combine this with the ongoing devaluation of oil, and their situation looks increasingly bleak. If renewable energy ever makes a quantum leap and becomes the norm, we might just see the middle-east countries collapse back into the desert tribal societies they once were. And not, if you ask me, before time.
     
  6. crimsonghost747

    crimsonghost747 Senior Investor

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    Renewable energy is... well it's a different thing than oil. As long as your car needs gas to run, no renewable energy will replace oil. Electricity is a whole other thing, then again nowadays about 1% of US oil consumption goes towards electricity generation.
     

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