There's a 70% chance Opec may agree on oil output cut: Nomura

By Ben Moshinsky

There is a 70% chance that Opec will agree on a production cut of 1 million barrels per day at a November 30 meeting, according to analysts at Nomura.

A cut that size would send oil prices up more than $2 a barrel, Nomura analysts said.


Nomura argues that the costs of low oil prices no longer outweigh the benefits of forcing competi tors, particularly those based in the US, out of business.

“The success of Saudi Aramco's strategic IPO and the long term restructuring of the Saudi Arabia economy also hinges on higher oil prices ahead. Trump's surprise election win could also shift Iran's focus on market share to maximising short-term revenue,“ Nomura said.

“Opec has a good track record of taking urgent decisive actions to cut output to boost prices. Following the Lehman Brothers bankruptcy, the cartel succeeded in boosting oil prices from below $40bbl to over $80bbl within 12 months,“ the analysts said.

Oil surged to near-$50 a barrel at the start of the week on hope that a cut would be agreed, only to fall back on rumours the curbs won't materialise. If the cut is announced, prices will surge, Nomura said: “By cutting the cartel's output by 1 million bopd, global oil prices need only to increase by $2bbl from current levels to offset any potential revenue declines.