OPEC’s Moment of Truth

Interesting article on the dynamics currently at work in the global oil market. OPEC reached a deal with Russia to cut supply. It’s working but Saudi Arabia is undergoing an internal revolution, and Venezuela is a mess.

The producers’ efforts to clear the oil surplus are starting to pay off. They’ve drained excess inventories in developed nations this year by 183 million barrels, or more than half of the glut, which now stands at about 140 million barrels, according to OPEC data. That has revived London-traded crude futures, which sank below $45 a barrel this summer, to a two-year high of $64.65 on Nov. 7.

That success goes some way to countering accusations that OPEC had lapsed from the dominant market force of the 1970s and 1980s into irrelevance. Although its 14 members still pump 40 percent of the world’s oil, their share has dwindled from the days when OPEC held the global economy in thrall.

“People may have thought that OPEC was dead, but Saudi Minister Khalid Al-Falih has succeeded in building agreements and alliances within OPEC and non-OPEC, such as Russia, to restrain production,” said Luis Giusti, an adviser at the Center for Strategic and International Studies and former CEO of state-run Petroleos de Venezuela SA.

Posted by on November 27th, 2017 at 12:34 pm


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