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When producers that are inherently prone to conflict and resource nationalism lose supply, output will most likely not return to previous levels.
One consequence of Saudi Arabia's “anti-corruption” purge is a more hawkish foreign policy and increased tension with Iran. With the U.S.’s national security and economic well-being vulnerable to instability in Saudi Arabia and the Middle East, measures to strengthen energy security and reduce oil dependence are increasingly imperative.
Despite the effects from the OPEC production cut and austerity measures, Saudi Arabia can ride out the current economic headwinds without having to switch market strategy. That outcome, though, is not a certainty since there are factors that could further negatively impact the Saudi economy.
The Kurdish predicament is defined by energy and oil. Their assets hold the promise of prosperity and independence—but they also serve as tripwires for conflict and sources of leverage for opponents.
As the group doubles down on its production cut, questions linger about exit strategy, capability, and size.
Iranian oil output has come a long way since the nuclear deal went into effect and tough sanctions were lifted in January 2016, but the outlook now very much depends on the outcome of the May 19 presidential election.
Nothing will change materially in the oil market until there’s a significant stock draw, a development that appears doubtful, which could ultimately force OPEC to change strategy once again.
The OPEC commission would examine whether the cartel’s behavior is designed to disadvantage U.S. oil producers and secure market power through anti-competitive behavior.
OPEC agrees to its first production cut in eight years, reminding the market of its enormous power, but the ultimate impact of the cartel's action is far from certain.