OPEC

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

OPEC

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OPEC meets in Kuwait to assess progress. OPEC officials are huddling in Kuwait this weekend to gauge the health of the oil market and figure out next steps. They won’t make any decisions until May at least, but they will likely discuss the painfully slow pace of market adjustment. A survey of 13 oil market analysts by Bloomberg concludes that OPEC has little choice but to continue their production cuts. “They’ll probably think they need to grin and bear it longer,” Citi’s Ed Morse said. “The glue that bound them together to begin with, which was higher prices, is the glue that will continue to bind them together.”

Saudi Arabia’s credit rating cut. Fitch Ratings slashed Saudi Arabia’s credit rating by one notch to A+ from AA- over concerns about public finances. The downgrade comes as Saudi Arabia and other major oil producers struggle with the dilemma of allowing oil prices to sink lower or make painful production cuts in order to keep prices elevated. Fitch also questioned whether or not the proposed economic reforms in Riyadh will be implemented. “The scale of the reform agenda risks overwhelming the government’s administrative capacity,” Fitch said.

Saudi Arabia might demand Iran cutback if OPEC is to extend deal. Speculation about whether or not OPEC will extend its production cut deal for another six months will be one of the most significant variables affecting oil prices in the short run. S&P Global Platts reports that Saudi Arabia might only agree to an extension if Iran agrees to cut its production, something that it did not have to do as part of the initial deal. Iran agreed to a cap on production slightly higher than its October baseline for the January to June period, but Saudi Arabia is growing tired of taking on the bulk of the sacrifice for the market adjustment and might stipulate that other countries make a larger sacrifice if the deal is to be extended through the end of the year.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: OPEC

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Dan Steffens
Energy Prospectus Group
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