FAST FIVE: Oil Prices Climb As OPEC+ Reportedly Nearing Production-Cut Agreement
Oil traders pushed crude prices 5% lower on Thursday after OPEC+ members failed to reach an agreement on production cuts – and outcome that helped stoke rumors that Russia and Saudi Arabia, the bloc's two most influential members, had struck an agreement to keep production elevated to placate President Trump.
Still, in one sign that the bloc's two most dominant members might not be willing to cooperate, Russia and Saudi Arabia have refused to jawbone the market lower: Russian Energy Minister Alexander Novak said that while Russia would consider cuts of 100k-150k b/d, this deceleration would need to be short-lived, with production possibly ramping back up after three months because “market conditions may change.” And even if they do relent, analysts have expressed doubts about whether 1 million b/d in cuts would remove enough supply from the market.
Novak and Falih reportedly met Friday, though the details of what was said were unclear.
As production in the Permian Basin relentlessly accelerates, other producers worry that any revenue they gain from cuts will be offset by ceding more market share to their American competitors.
And hopes that a rebound in oil prices (due to its connotations for capex spending and, more broadly, economic growth) might rescue the equity market have added another possible repercussion to the dilemma.