The Fake Hare
OPEC is waving around the fact that it has cut production from 31.6 million bpd to 30.8 mil bpd but this is the same old cycle of events that we’ve seen since the U.S. became a major oil producer.
Expected Impact on Prices
The country now accounts for some 75-80% of all new global oil production, which is one hell of a statistic. Without further cuts from the usual producers, this U.S. production march will eventually cause a big drag on prices.
What will happen next?
Does the Middle East try and price the shale oil producers out of the market again like they had tried four or so years ago? It isn’t expected that they would risk the fragile nature of their oil dependent economies. Further cuts it has to be then.
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Source: Freight Investors Service