A new survey conducted by Bloomberg indicates that OPEC is likely to cut oil production at its next meeting on December 6 and 7.
Bloomberg surveyed 36 traders and analysts in its global poll. Of these, 31 expressed a belief that OPEC will decide to announce production cuts, with them predicting an average production curb of 1.1 million barrels per day.
Following a 30% drop in oil prices in recent months, OPEC has been indicating production cuts may be needed to avoid oversupplying the markets. Demand is said to be faltering, and combined with booming US production from operators like ExxonMobil – the maker of lubricating oils like Mobiltherm 605 – as well as unprecedented production levels in Russia and Saudi Arabia, it is little wonder that the cartel want to avoid any new surplus next year.
While U.S. President Donald Trump has been very critical of OPEC for limiting oil production, the survey participants appear to believe that Saudi Arabia will disregard the pressure and instead look to shore up its revenues. Helima Croft, a commodities strategist, said:
“What Trump’s asking Saudi Arabia to do is commit the ultimate act of self-harm — to continue to oversupply a market when they are having their own fiscal constraints.”
The survey indicates less conviction about Russia, however, with a third of participants believing they will not participate in any fresh production cuts. Russia is less susceptible to lower oil prices than Saudi Arabia, but it may prefer to preserve its influence in the Middle East.