OPEC is desperate to see oil prices go up and so is Russia (both the latter and the Sauds are on a real downward trend on their financial reserves) so I’m not surprised about this. However, there’s one phrase in this that makes no sense at all (emphasis mine, reformatted) and includes the US fracking industry:
Saudis, Gulf OPEC Members Offer To Cut 4% Of Oil Output
Just when a potential OPEC deal was looking more like wishful thinking than a reality, sources told Reuters on Thursday that Saudi Arabia and its Gulf OPEC producer allies had signaled that they would be ready to cut their near record crude oil production by 4 percent. According to the Reuters sources, the energy ministers from the Gulf countries told Russian Energy Minister Alexander Novak last Sunday in Riyadh that they would be willing to cut. Novak, on the other hand, told the Gulf ministers that Russia would not cut, but rather freeze its crude oil output at its current level.
The Saudis and their Gulf OPEC allies are expected to table the offer to cut 4 percent of output until a meeting on October 28 and 29, when OPEC and non-OPEC producers, including Russia, will discuss details of the deal-to-make-a-deal they had reached in Algiers last month.
…Although it has not been officially communicated, there has been a basic general understanding that only conflict-torn Libya and Nigeria, as well as post-sanctions Iran, would be given leeway while others are left to cut production.
A possible deal is further undermined by that very same Iraq, which questioned OPEC’s output estimates the day after the cartel agreed to work toward a production limit range of 32.5 million bpd and 33 million bpd. Since then, Iran and Venezuela have also joined the group of those discontented with how OPEC uses secondary sources to report production data for each member state.
And I bet that US frackers are just salivating at this! Per usual, American industry has used technical prowess to lower its cost per barrel to levels far lower than once thought. Sure, a lot of workers and boom-time companies went belly-up when prices fell hard and fast but the most nimble simply downsized, capped the higher priced wells, and continued to compete. If OPEC wants to give up that volume, I bet a few wells will get back into production pretty quickly
Frackers – the best weapon in the US Foreign Policy toolbox.
(H/T: Oil Price)
