OPEC+ Risks Oil Slump Below $50
The impact of a market downturn wouldn’t be limited to OPEC. American shale production has already slowed considerably as lower prices constrain drilling, productivity slackens and investors push companies to provide returns rather than invest in output growth. Drilling could plunge by 20% if OPEC+ eschews additional cutbacks, Rats said.
The gravest fallout of inaction for OPEC however may not be financial. Having promised to keep the market in equilibrium, its reputation may suffer if the group sits back and allows a surplus to develop.
“OPEC is not any longer the market maker for oil,” said Dario Scaffardi, chief executive officer of Italian refiner Saras SpA. “I think they’re reaching their limit.”
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