Saudi Arabia wants fellow OPEC members to extend an agreement to lower oil production when the group meets on Dec. 5 and 6.
What Saudi Arabia Wants
OPEC and other oil rich countries agreed to lower their combined oil output by 1.2 million barrels a day through the end of March 2020. But the Saudi government wants to renew the agreement in the upcoming OPEC meeting in Vienna. Ironically, the timing of the meeting will coincide with its state-run oil behemoth Saudi Aramco who will announce the pricing of its shares on Dec. 5.
An oil adviser to Saudi Arabia told Wall Street Journal the country needs oil prices stabilize at $60 or more. The country "can't afford" falling oil prices as it can negatively impact domestic investors who bought into Aramco's IPO.
Why It's Important For Oil
The politics of oil is very complicated as each producing nation has different needs or motivations. Russia for example doesn't want to discuss further oil curbs in Vienna and wants to wait until the end of March before making any decision.
In addition, some OPEC members who agreed to cut their production failed to deliver on their promises. Iraq is a notable standout as it promised to reduce production by 175,000 barrels a day by October but has fallen well short at just 40,000 barrels a day.
Broader and growing geopolitical developments poses another concern for the oil market. Iraqi prime minister Adel Abdul-Mahdi said he would resign and the country's oil minister Thamir Ghadhban may or may not leave as well.
In Iran, veteran oil minister Bijan Zanganeh could be impeached after deadly demonstrations are linked to the country's decision to raise fuel prices.
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