The day oil markets have been waiting for has finally arrived. But despite reports suggesting Saudi Arabia could be ready to cut production in a bid to support prices at Friday’s meeting of the Organization of Petroleum Exporting Countries (OPEC), analysts say no one should expect magnanimity from the group’s largest producer.
Oil prices rallied on Thursday amid a weaker dollar and a report by Energy Intelligence that suggested that Saudi Arabia, the de facto leader of the 12-member oil producing group, could be ready to make a formal proposal for OPEC output cuts — as long as non-OPEC producers did the same.
By Friday, however, those rumors had been widely dismissed and analysts said OPEC was unlikely to deviate from its production ceiling of 30 million barrels per day (bpd). It has often exceeded this level in recent months, despite a glut in global oil supply which has seen prices tumble from last June, from $114 a barrel to around $40 currently.
Saudi Arabia’s oil minister Ali al-Naimi rebuffed the report Friday, saying that while Saudi was ready to cooperate with “anyone who helps balance the market” the report of a cut was “baseless,” Reuters reported.
The move by OPEC not to cut has been largely seen as a way for the group to maintain market share in the face of rivalry from U.S. shale oil producers who have higher-cost production. The strategy appears to have worked with many U.S. producers closing rigs, canceling projects and lowering production.