OPEC officials have played down the prospect of deeper crude oil production cuts. Demand may be picking up and US shale producers are finally feeling the pinch. However, tepid prices and the awkward timing of the giant Aramco IPO will make a strong case for the group to take more action.
Oil continuing to trade around $62/b is a problem OPEC has failed to resolve. The group’s key producers from the Middle East require higher prices to sustain their petrodollar economies. Saudi Arabia requires prices above $80/b to balance its budget and faces its seventh straight year of total government spending outstripping revenues in 2020 unless it can engineer a rebound in the value of its main export.