Opec and major non-Opec producers are preparing for informal talks on the sidelines of the International Energy Forum (IEF) in Algiers next week. The topic of course is the persistent supply glut that has prevented oil prices from pushing above $50/B for any prolonged period this year. But despite the financial pain this is inflicting on many members, it’s far from clear that Opec kingpin Saudi Arabia desires prices to rise any time soon.
Yes, the kingdom’s finances are hurting and it’s projecting an eye watering $87bn budget deficit this year. But this is less than 2015’s $98bn and while its foreign reserves were down 16% year-on-year in July, the rate at which it’s drawing on them is falling (MEES, 2 September). The kingdom knew it was likely to face such a period of economic pain when it embarked on its market share over price strategy in 2014 and shows no sign of changing tack now. (CONTINUED - 1037 WORDS)