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Wall Street Journal: Economics Drove Saudi OPEC Move
Behind the kingdom’s decision to agree to production cuts was a recognition of the consequences of low oil prices.
Scanning the latest intelligence on oil markets, Saudi Arabian officials came to an upsetting conclusion this month: the kingdom’s oil policy wasn’t working.
Saudi energy minister Khalid al-Falih’s attention was drawn to an Organization of the Petroleum Exporting Countries’ prediction that a global glut of oil would persist well into 2017, said people familiar with the matter. The data suggested that economic pain from low oil prices would last longer than the ministry first believed, as the Saudis fought an expensive war in Yemen and middle-class living standards eroded.
“The pressure was mounting,” said a person close to the Saudi oil ministry. “Falih and the government realized they need to show they are not just watching their economy and others suffer.”
Mr. Falih didn’t respond to requests for comment.
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Update: Saudis tried to cut secret deal with OPEC – WSJ (RT)
WNU Editor: This is why I believe these recent moves by OPEC to limit production and raise the price of oil will fail. No one is interested in cutting production, and what Saudi Arabia is proposing will not make a dent on the current price of oil. In addition .... the technology of fracking is improving, and it will offset any cuts that OPEC member states may agree to. Bottom line .... the days of $100/barrel oil are gone for at least the medium term.
