Oil majors to mull fresh cuts as trade war hits prices

Dubai, Sept 8 (AFP/APP):Top oil producers will consider fresh output cuts at a meeting this week, but analysts are doubtful they will succeed in bolstering crude prices dented by the US-China trade war.

The OPEC petroleum exporters’ cartel and key non-OPEC members want to halt a slide in prices that has continued despite previous production cuts and US sanctions that have squeezed supply from Iran and Venezuela.

Analysts say the OPEC+ group’s Joint Ministerial Monitoring Committee, which monitors a supply cut deal reached last year, has limited options when it meets in Abu Dhabi on Thursday.

The obvious move is to deepen the reductions.

But while that could help prices, it also risks further losses of market share, analysts say.

“OPEC has traditionally resorted to production cuts in order to shore up the prices,” said M. R. Raghu, head of research at Kuwait Financial Centre (Markaz).

“However, this has come at the cost of reduction in OPEC’s global crude market share from a peak of 35 percent in 2012 to 30 percent as of July 2019,” he told AFP.

The 24-nation OPEC+ group, dominated by the cartel’s kingpin Saudi Arabia and non-OPEC production giant Russia, agreed to reduce output in December 2018.

That came as a faltering global economy and a boom in US shale oil threatened to create a global glut in supply.

Previous supply cuts have mostly succeeded in bolstering prices.

But this time, the market has continued to slide — even after OPEC+ agreed in June to extend by nine months an earlier deal slashing output by 1.2 million barrels per day.

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