What does the OPEC+ production cut mean? - Sept 6

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

What does the OPEC+ production cut mean? - Sept 6

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From OilPrice.com

OPEC+ is reimagining its role in the oil markets and even though its promise of a tiny cut certainly does not impress outright, one should never underestimate the geopolitical symbolism of its actions. By signaling that the oil group is eager to make swift changes in case geopolitical realities change (ehm, Iran), the lower October production target is also a mirror into the Middle Eastern psyche – as oil started moving closer to the fiscal breakeven levels of Saudi Arabia or Iraq, maintaining crude prices within the $90-100 per barrel bandwidth will remain a top item on the OPEC+ agenda. < MY TAKE: Since there is no spare capacity anywhere in the world other than continuing to drain SPRs, OPEC+ does have control of global oil prices. If Saudi Arabia and their friends in the Persian Gulf area want $100/bbl oil they can easily get it by announcing a much larger production cut next month. 500,000 bpd cut should do the trick.

OPEC+ Brings End to Era of Production Hikes. OPEC+ agreed to cut collective output by 100,000 b/d, reversing the oil group’s decision from last month, marking the first month in more than two years when they curb production targets amidst unprecedented price volatility.

Iran Talks ‘In Danger’ Again. The EU’s chief negotiator in the nuclear talks with Iran, Josep Borrell, stated that the negotiations are in danger as Washington and Tehran started diverging on several contested points, most notably guarantees that the US cannot withdraw unilaterally again from the JCPOA. < Iran sees Team Biden as weak. If Old Joe really wants a good deal for the U.S. he should be tightening the screws on Iran and stop playing their stupid game.
Dan Steffens
Energy Prospectus Group
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