Dow Jones / Market Watch (gated) have a good piece up citing Capital Economics on why the Saudis could flood the market with cheap oil, and to watch for the signs of this happening.
In summary
Saudi Arabia may increase oil production due to deteriorating cohesion among OPEC+ membersOPEC+ producers have been overproducing by up to 800,000 barrels per day despite voluntary production cutsSaudi oil minister warned that prices could drop to $50 a barrel if members don’t comply with cuts, though OPEC denied this warningCapital Economics suggests Saudi Arabia is frustrated and may use alternative funding methods to withstand lower prices, as seen in past policy shiftsIncreasing production could help Saudi Arabia regain market share but would require a significant price fall below $50 a barrelThe chance of Saudi Arabia ramping up production by end-2025 has increased to 30%.The December OPEC+ meeting will be crucial, with past meetings signaling policy shifts in 2014 and 2020.
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The OPEC and non-OPEC Ministerial meeting is on 1 December
ps. News of (price drop) relevance to oil from earlier:
Netanyahu told US that Israel will strike Iranian military, not nuclear or oil, targets
This article was written by Eamonn Sheridan at www.forexlive.com.
