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The current output deal between Opec and 10 non-members is set to expire in March, and it is looking increasingly probable that an extension will be agreed upon this month in Vienna. But participants should perhaps consider trimming each country’s production allocation to dampen recent price gains.
Oil prices have posted four consecutive monthly gains. But the price rally looks far from secure despite Qatari Energy Minister Muhammad al-Sada saying on 29 October that the market is heading to a fair price. With Brent already in the mid-$60s/B, the temptation to push towards $70/B is understandable, but could prove counterproductive. Even prices at current levels look sufficient for rival US producers to boost output, potentially precipitating another price fall and eating into Opec’s market share.
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