Wednesday, November 26, 2014

OPEC to Declare War on the US on Thanksgiving Day / By Marin Katusa / Nov 25, 2014
In two days, on Thanksgiving Day in the US, the Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna. The hot question of the day is, of course: Will OPEC cut oil production or not, and by how much?
Saudi Arabia alone makes up 25% of OPEC’s oil production and is OPEC’s controlling member. Will Saudi Arabia want a reduction, and will OPEC make a meaningful production cut of, say, over 2.5 million barrels of oil per day (bopd)?
2.5 million barrels—that’s the amount the current bulls have been speculating about. (In comparison, the average production cut by OPEC over the last 30 years was around 1.25 million bopd.)
My answer is no; there’s no way that OPEC under Saudi Arabia’s watch will cut production anywhere near 2.5 million bopd. At most, it’ll make a nominal cut, most likely between 500,000 and 1 million bopd… closer to 500,000, if any cut at all.
A senior officer of OPEC agrees with me, as you’ll see in the video interview below.

A Few Important Aspects of OPEC’s Oil Production

Even if OPEC does agree to cut oil production—and anything below 2.5 million bopd isn’t going to change the current oversupply of oil—we fully expect some of the member states to cheat and not stick to their production quota. That’s an assumption the aforementioned OPEC officer confirms.

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