Saudi Arabia To Cut Oil Output In Bid To Force Price Increase
Saudi Arabia, the de facto leader of OPEC, announced it would steeply cut oil exports in April in a bid to push the price of a barrel of crude above the $70 threshold. According to analysts, a prospective budgetary shortfall is the impetus for the cut. US President Donald Trump has said he’d oppose such a move due to his desire to apply pressure to the regimes of oil-producing Iran and Venezuela. While Riyadh claims the cut is geared toward reducing high inventories, thereby stabilizing global supply and demand, officials at the International Monetary Fund reported that the kingdom would require oil to hit $80-$85 a barrel in order to balance its books. Other sources have noted that the House of Saud wants to avoid a repeat of the 2014-2016 oil price crash, which took the price to below $30 per barrel. Washington could nevertheless make up for the expected drop by raising output from a current estimated daily production of 12 million barrels. As of Monday morning, Brent crude futures were trading at about $66.50. Over the past year, the price per barrel has fluctuated from below $50 to above $85.