As OPEC's November meeting draws near, energy ministers from Saudi Arabia and Gulf allies told their Russian counterpart this week that they are willing to reduce their peak oil output by up to 4%. Notably, Saudi Arabia is looking to rally support for the proposed OPEC production cut announced in Algiers in September. Support for the deal has waned in recent weeks as Iraq recently called for an exemption, adding to the list of members seeking special treatment. Specifically, countries including Libya, Nigeria and Iran are looking to be exempt from the deal as their output has been hit by wars and sanctions. Saudi Arabia is clearly motivated to reach an agreement with OPEC in November, as low oil prices continue to batter the Kingdoms finances. Saudi Arabia recently stated that its foreign exchange reserves have fallen nearly 20% over the last two years, to $587 billion through March 2016. Further, the country recently cut ministers' pay by ~20% and eliminated perks for public sector employees to save additional costs. Given that Saudi Arabia continues to meet with OPEC members and Russia prior to the November 30th meeting, it would seem very likely that a deal to cut production will be reached. For the first time in a long time, it would seem that Saudi Arabia has the will and the economic motivation to alter its previous free market strategy and finalize an OPEC deal. Should OPEC decide to cut production in November, WTI would likely move higher, potentially into the $55-$60 per barrel range.
A Canadian Energy expert