The major oil-producing countries led by Saudi Arabia and Russia are wrestling with whether to make another cut in supply to the global economy as the OPEC+ alliance struggles to prop up sagging oil prices that have been a boon to U.S. drivers and...
The 23-member group is meeting Sunday at OPEC headquarters in Vienna after sending mixed signals about possible moves. Saudi Arabia, dominant among the oil cartel’s members, has warned speculators that they might get burned by betting on lower prices. Russia, the leader of the non-OPEC allies, has indicated no change to output is expected.
International benchmark Brent crude climbed as high as $87 per barrel but has given up its post-cut gains and been loitering below $75 per barrel in recent days. U.S. crude has dipped below $70. The Saudis, on the other hand, need sustained high oil revenue to fund ambitious development projects aimed at diversifying the country’s economy. The International Monetary Fund estimates the kingdom needs $80.90 per barrel to meet its envisioned spending commitments, which include a planned $500 billion futuristic desert city project called Neom.
“Our expectation is that OPEC+ will stick with current output quotas,” he said, adding that “there have been signs that the government may be readying to live with lower oil prices and running budget deficits.” Insurers and shipping companies largely based in Western countries are barred from handling Russian oil if it is priced above the cap. Russia has found ways to evade the limits through “dark fleet” tankers, which tamper with transponders showing their locations or transfer oil from ship to ship to disguise its origin.
In fact, Russia’s total exports of oil and refined products such as diesel fuel rose in April to a post-invasion high of 8.3 million barrels per day. That is in spite of a near-total boycott from the European Union, formerly Russia’s biggest customer.
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