Dow Jones / Market Watch (gated) have a good piece up citing Capital Economics on why the Saudis could flood the market with cheap oil, and to watch for the signs of this happening.
In summary
- Saudi Arabia may increase oil production due to deteriorating cohesion among OPEC+ members
- OPEC+ producers have been overproducing by up to 800,000 barrels per day despite voluntary production cuts
- Saudi oil minister warned that prices could drop to $50 a barrel if members don't comply with cuts, though OPEC denied this warning
- Capital Economics suggests Saudi Arabia is frustrated and may use alternative funding methods to withstand lower prices, as seen in past policy shifts
- Increasing production could help Saudi Arabia regain market share but would require a significant price fall below $50 a barrel
- The chance of Saudi Arabia ramping up production by end-2025 has increased to 30%.
- The December OPEC+ meeting will be crucial, with past meetings signaling policy shifts in 2014 and 2020.
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The OPEC and non-OPEC Ministerial meeting is on 1 December
ps. News of (price drop) relevance to oil from earlier:
