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There is little honour among OPEC cartel members to cut production - what will this mean for prices?

Published By: ETF Securities
Author: Nitesh Shah, ETF Securities
Thursday May 18, 2017 at 12:00

Although individual OPEC countries involved in the deal to cut production are close to compliance, as a group, the cartel is only 83% of the way to cutting 1.2mn barrels.  Extending the deal looks difficult given that participating non-OPEC countries are doing far worse on compliance and want more time to assess market conditions.  Cutting output has offered market share to the US.  It is difficult to believe that OPEC will want to continue to lose market share unless prices significantly recover. Rising US production keeps a lid on prices.

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