Crude Oil Prices Fall as OPEC Deal Faces Internal Struggles
Crude oil prices suffered their largest single day drop since September, ending the session 4 percent lower. The move came after it was announced that a meeting between OPEC and non-OPEC producers on Monday to discuss technical aspects of a supply cut has been canceled.
The cancelation came after it became clear that Saudi Arabia would not be sending a representative. As one of the cartel’s largest producers, Saudi Arabia felt that OPEC needed to solidify its internal supply agreement before going to the negotiating table with non-OPEC members.
The issue raised by Saudi Arabia underscores the lingering lack of cohesion among OPEC members. Iran has been relieved of economic sanctions recently and has asked for an exception from output cuts as it attempts to rebuild capacity. Libya and Nigeria have recently seen supply disruptions due to unrest in the region. They too are seeking exemptions from supply reduction.
Granting all of these exceptions would put more pressure on the largest producers to shoulder a larger burden of supply management. The deal is expected to target cuts that would reduce output to between 32.5 and 33 million barrels per day. A formal meeting is scheduled for November 30th where OPEC and non-OPEC countries were meant to unveil the scheme's implementation details.
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