After a successful “agreement” to cut production in Vienna, OPEC has turned their attention to non OPEC members. Russia, Mexico, Azerbaijan and Oman have reportedly joined the discussion and have provisionally agreed to a reduction in supply. The announcement sent prices up $3 per barrel. Having spent endless months of speculation and discussions, Investors must be cautious for any signs of disillusions and disagreements.
It’s believed that the OPEC deal has many flaws and it may lead to a breakdown in reduction promises. It only takes a few countries to exceed supplies to overturn the entire agreement. OPEC members must set an example of strong willingness and stubbornness to complete the deal.
Saudi Arabia, one of the world’s largest oil suppliers, is committed to abide by its quotas. Saudi Energy Minister Khalid al-Falih said “I can tell you with absolute certainty that effective Jan. 1 we’re going to cut and cut substantially to be below the level that we have committed to on Nov. 30.”
At current figures OPEC need to cut at least 750,000 barrels a day to make a difference in the oil market. OPEC predicts that the Crude oil can break past $60 per barrel by 2020. After months of talk global markets will see if they can walk the walk.