1. Oil may fall to $40 a barrel if OPEC doesn’t extend cuts

Oil may fall to $40 a barrel if OPEC doesn’t extend cuts

Crude will probably drop to less than $40 a barrel unless OPEC and allied producers extend their collective cuts in output beyond June, according to the Abu Dhabi Investment Authority’s head of research.

By: | Published: April 26, 2017 5:32 PM
“If OPEC and the coalition don’t extend the agreement to continue cuts, that price floor will go,” he said. “Without it, prices would fall, and there’s nothing to stop oil going below a barrel.” (Reuters)

Crude will probably drop to less than $40 a barrel unless OPEC and allied producers extend their collective cuts in output beyond June, according to the Abu Dhabi Investment Authority’s head of research. The six-month cuts that took effect in January have set a floor for prices, but an increasing supply of U.S. shale oil together with record-high inventories are keeping the per-barrel price of crude from rising beyond the upper $50s, Christof Ruehl said Wednesday at a conference in Dubai.

“If OPEC and the coalition don’t extend the agreement to continue cuts, that price floor will go,” he said. “Without it, prices would fall, and there’s nothing to stop oil going below $40 a barrel.”

The Organization of Petroleum Exporting Countries and other major producers including Russia agreed in December to pump less oil to try to rein in a global glut weighing on prices. OPEC plans to decide at a meeting next month whether to extend its production cuts into the second half of the year. Benchmark Brent crude was trading 9 cents lower at $52.01 a barrel at 2:14 p.m. Dubai time.

Watch this also:


Producer countries won’t come close to eliminating the excess of stored oil unless they extend their output limits into the second half of the year, said Ruehl, who worked formerly as BP Plc’s chief economist. Oil consumers may need two and a half more years to use up the current surplus in global inventories, he said.

One consequence of the cuts for OPEC is that Iraq and Iran are gaining market share at the expense of the group’s biggest member Saudi Arabia, Ruehl said. The Saudis have made comparatively larger cuts in production than Iraq, which ranks as OPEC’s second-biggest producer, while Iran, the third-largest, is allowed to slightly increase output.

Abu Dhabi, capital of the United Arab Emirates, holds most of the OPEC nation’s crude reserves. The Abu Dhabi Investment Authority is one of the world’s largest sovereign wealth funds.

Get latest news and updates on Auto Expo 2018, check breaking news on Budget 2018, like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top