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OPEC on verge of conflict as members to meet in Vienna

OPEC members are meeting again on Thursday. Meanwhile, reporters wonder if they should even pay any attention to the event.

01.Jun.16 5:25 AM
By Anastasia Sutulova


OPEC on verge of conflict as members to meet in Vienna
Helima Croft, head of commodity strategy at RBC Capital Markets, notes that the meeting can turn out to be boring, as it is not clear whether Saudi Deputy Crown Prince still cares about the organization. Last month, he presented a plan to set aside oil revenues by 2030. This means that Saudi Arabia will dismantle its own decades old economic and foreign policy.

One more measure, which is to freeze output, was proposed several months ago. However, there are companies that believe that Saudis would rather trample over smaller producers and refuse to consider collective interest.

Nevertheless, there are analytics that have an opposite point of view. They think that if Saudi Arabia moves away from its traditional role as market stabilizer, they will burn through their reserves even before environmental policies limit demand.

Moreover, there are several countries that can edge out Saudi Arabia to emerge as Asian largest source for crude oil imports, like Russia and Iran. Unlike Saudi Arabia, Iran can promise Asian countries a long-term access to low-cost production. The Saudis understand that this is something they canít do, which could bring them back to the cooperation with the OPEC members.

Thought, an agreement in Vienna still seems very unlikely.

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