OPEC’s Struggle To Avoid $40 Oil
By Nick Cunningham - Jun 10, 2019, 6:00 PM CDT
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Tanker at sea
A few weeks ago, OPEC+ was mulling the possibility of exiting the production cut agreement because the oil market was at risk of over-tightening. Now Saudi Arabia is scrambling to extend the cuts and may even unilaterally lower its own production further in an effort to head off a price slide.
On Monday, officials from Saudi Arabia and Russia reportedly discussed a possible scenario in which oil prices crashed below $40 per barrel, a recognition that the market has rapidly deteriorated. They view that outcome as a possibility if they can’t agree on an extension. “Today there are big risks of oversupply,” Russian Energy Minister Alexander Novak said in Moscow after meeting with Saudi oil minister Khalid al-Falih. “We’ve agreed that we need to run a deeper analysis and to see how events unfold in June.”