The OPEC Deal Could Fall Apart In June | Zero Hedge
Description: OPEC’s oil production cut agreement could start falling apart soon, as Saudi Arabia and Iran once again face off...

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# The OPEC Deal Could Fall Apart In June

Authored by Irina Slav via OilPrice.com,

OPEC’s oil production cut agreement could start falling apart soon, as Saudi Arabia and Iran once again face off. This time, however, the spat is over determining what the best price level is for the commodity. That’s what Iran’s Oil Minister Bijan Zanganeh told the Wall Street Journal in an interview.

The split, apparently, stems from Saudi Arabia’s insistence that crude oil should be kept closer to US$70 a barrel - a level Brent touched briefly early this year - and Iran’s equal insistence that US$60 is a better place for oil to trade at.

This disagreement could see the cartel start unwinding the cuts as early as June, when it will meet with its partners to discuss progress and next steps. Zanganeh’s explanation of the Iranian stance is anything but a surprise: “If the price jumps [to] around $70 ... it will motivate more production in shale oil in the United States,” he told the WSJ.

Zanganeh is not wrong, but the problem is that U.S. drillers have demonstrated that they could pump more at US$60 a barrel, too, so bringing prices closer to that level is not a guaranteed way to stymie U.S. oil production growth. Production has been growing steadily, last week hitting 10.37 million bpd.

The oil production in the United States is not the only problem. The bigger problem is soaring U.S. exports that are eating away the market share of OPEC members. This could be the last drop to swing OPEC in Iran’s favor.

Bloomberg quoted an ING analyst yesterday as saying that crude could fall below US$60 a barrel because of rising U.S. exports to Asia, a key market for every producer. The OPEC deal is under threat, ING commodities strategist said, because U.S. crude supplies are displacing OPEC’s. “The longer the deal goes on, it’s going to start falling apart. They continue to give market share away to the U.S.”

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Justin Case Mon, 03/12/2018 - 14:16 Permalink

Go for $65/bbl

But merican hegemony needs a higher price for the USD recycling program. New records will be made in the murican debt bubble. Belgium buys a billions here and there, while China is off loading moar.

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Arnold Mon, 03/12/2018 - 14:18 Permalink

Sixty vs seventy is the diversion, not the arguement.

Like the frackers, the former Soviet will produce the same or more at forty.

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Pandelis Mon, 03/12/2018 - 14:19 Permalink

everything for some strange reasons seems to be falling apart this summer ... just coincidence i guess... yeah well, whatever...

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Justin Case Pandelis Mon, 03/12/2018 - 14:23 Permalink

It's like a high speed wobble on a bike. At first it starts with a shimmer and then progresses until the handle bars are jolting left and right. A real tank slapper. Then you crash.

In reply to everything for some strange… by Pandelis

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Arnold Pandelis Mon, 03/12/2018 - 14:25 Permalink

Who knew that the Summer of Recovery number 9 would be a decimation event.

Huh, a paradigm shift.

(theme post Monday, sorry.)

In reply to everything for some strange… by Pandelis

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NickyGall Mon, 03/12/2018 - 14:25 Permalink

Here is an interesting look back in time at when Shell admitted that the production of oil and natural gas was leading to global climate change:

https://viableopposition.blogspot.ca/2018/01/shell-and-climate-change.html

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