GCC: Oil production down or up?

3 min
Manfred Stamer
Manfred Stamer Senior Economist for Emerging Europe and the Middle East

Last weekend, oil producers led by Saudi Arabia expressed discontent with the latest oil price development and suggested that a 1mn bbl/day decline in oil supplies from October levels was required to balance the market and avoid a build-up of oil stocks. On 9 November, the oil price had retreated almost -20% since hitting a four-year high in early October, in part because the U.S. granted last-minute waivers with regard to its re-imposed sanctions on Iran on 5 November to eight big buyers of Iranian oil (including India, Japan, South Korea). Initially, oil prices climbed on Monday. But they swung back and fell further after U.S. President Trump put pressure on the OPEC, saying “oil prices should be much lower”. Also, investors got alarm that supply has started to outpace consump­tion. At the time of writing, benchmark Brent stood at USD67/bbl, another -5% down from 9 November. Expect continued oil price volatility in the near term until more clarity about future production levels is disclosed.