Last week the Russian energy minister started a rumor that Russia would be entering into discussions with OPEC aimed at a joint reduction in oil production as soon as February. An OPEC official later denied the veracity of the Russian oil minister’s statement, but the damage was done and the price of oil jumped several dollars.
Immediately, Iraq’s oil minister came out in support of any production cuts, but Iran issued a statement that it would not commit to production, regardless of promised non-OPEC cooperation. As it turned out, the rumor was false. Russia and OPEC are not preparing for discussions to cut oil production, although OPEC maintains the position that if non-OPEC producers wish to discuss joint production cuts, the organization is open and willing to talk.
Investors need to be wary of such rumors because the likelihood of joint OPEC – non-OPEC production cuts is extremely low, for the following reasons:
At this point, the rumors are just rumors, and are not substantial enough to justify action.
Add a Comment
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.