Crude Oil Price Forecast - crude oil markets fall hard again on Thursday

Eileen GuzmanDec 07, 2018

At a December 2016 meeting, OPEC members had agreed to a production cut to battle a supply glut that saw oil prices drop to $25 per barrel.

President Trump is pressuring OPEC to increase oil production as members of the organization are set to meet in Vienna on Thursday.

"We assume a cut of around 1.0 million barrels per day in the first quarter of next year, using October 2018 production levels as a reference".

The so-called OPEC+ group of oil producers, which includes the traditional players in the oil cartel as well as non-OPEC countries such as Russian Federation, look set to agree on cutting oil production to help shore up prices, defying calls from US President Donald Trump to leave output unchanged and keep prices low.

The Organisation of the Petroleum Exporting Countries (OPEC) is meeting at its headquarters in Vienna, Austria, on Thursday to decide its production policy. When some USA sanctions were lifted after President Barack Obama's nuclear deal with Iran, oil production in the country went up by about 1 million barrels a day to about 3.8 million barrels.

You can't buy Iranian oil and you can't facilitate the acquisition of oil or USA currency for Iranians.

The Saudi energy minister also recalled three earlier meetings with the Prime Minister, and said that the Prime Minister had been "very vocal".

It is understood that Saudi Arabia wants the OPEC to reduce output by around 1 million barrels per day, but this is dependent on how big the supply reduction from Russian Federation will be - if any.

The group could eventually agree to remove about 1 million barrels a day, about 1 percent of global output, from the market, Al Rumhy said.

"Given the recent ramp-up in supply from these producers, this represents a year-on-year decline in crude output of just 0.2 million barrels per day for 2019", Ann-Louise Hittle, vice president for macro oils at Wood Mackenzie, said in a briefing.

OPEC kingpin Saudi Arabia, in particular, finds itself in an especially delicate position in the wake of the murder of opposition journalist Jamal Khashoggi. OPEC made a decision to maintain 100 per cent conformity on the cuts announced in 2016 as compared to 152 per cent observed in May.

Novak, speaking from Saint Petersburg on Thursday, said that his country was watching closely how the situation was developing.

Iran hopes to be exempted from the cuts to keep its economy afloat, as the country faces harsh economic sanctions imposed by the US. A cut of 1 million barrels would be the minimum to support the market, and anything less could see the price of oil fall another $10 a barrel, according to Neil Wilson, chief market analyst at Markets.com.

OPEC is also riven by internal conflict, particularly the rivalry between Saudi Arabia and Iran.

But US President Donald Trump threatened on Tuesday to place "major tariffs" on Chinese goods imported into the United States if his administration didn't reach a desirable deal with Beijing. By some estimates, the US this year became the world's top crude producer.

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