OPEC Cuts Big … Maybe
OPEC has announced a reduction in production of 4.2 million barrels of oil per day. This is roughly twice the amount expected. Russia has announced that they are not going to cut production, though their output has been declining.
I’ve argued previously that OPEC cut announcements cannot be trusted. The incentive to cheat is too great. Kuwait, Saudi Arabia, and others are facing financial problems as bad as those in the US. Each member wants to increase sales. Of course, each also wants the best price available at the same time, which works if the other members of OPEC go along with the cut. Game theory applied.
