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OPEC-Russia Coordination Unlikely
Energy

OPEC-Russia Coordination Unlikely

Coordinated oil production cuts between OPEC producers and Russia are "highly unlikely" since a deal would require further cooperation between OPEC members amid Iran's growing production and ongoing rift with Saudi Arabia, Goldman Sachs said on Sunday. Furthermore, coordinated cuts would be "self-defeating" since higher prices as a result of an announcement of cuts would bring shale oil production back into the market quickly since previously shut wells would restart at prices above $40 a barrel, the bank was quoted as saying by Reuters. Oil prices rebounded last week from 12-year lows on indications of talks between Russian officials, Saudi Arabia and other OPEC members to cut output up to 5%. Oil prices will have to trade between $40 a barrel and $20 in the first part of 2016 in order to curtail supply enough to balance the crude market, said Goldman. "We reiterate our view that prices need to remain low enough to force fundamentals to create the adjustment back towards a new equilibrium," Goldman analysts said in a note.

 

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