Time For The Sauds To Nut Up

It was inevitable, but the tentative deal that OPEC struck to curb production is falling apart. Iran wants to keep increasing output to get back to their pre sanction levels, Libya seems to have it together enough that they can increase output, Venezuela has manipulated their bond market enough to keep the creditors off their backs for another year. Even Nigeria seems to have made enough peace with the Avengers that production is on the rise. But the death knell is Iraq. They are in the process of taking back Mosul from ISIS, and want to increase production to pay for this military action. So this deal looks doomed, and the price of oil will drop back under $50. Unless somehow Saudi Arabia unexpectedly decides to grow a pair and slash their production. There is precedent for them to do it. Shaving a few million barrels per day off of their output would bring the market into stability and would drive the price per barrel up to the $70 per barrel range. It would bring them some goodwill with a lot of countries and show that they are still a power in the market. And knowing that they legitimately have a few million barrels per day in reserve would give them a lot more clout when they threaten to flood the market. Even if they cut production, they would still be the largest producer in OPEC and the de facto power within that organization. And if the price of oil does come back up the rest of the member countries would have enough financial breathing room that they would be more amicable to production decreases of their own, and the orders of the Sauds. However it makes too much sense and the Sauds are too bitter and petty, so the deal next month will fall apart and the current status quo will remain.