As long as 800K bbl OPEC cuts = 800K bbl Saudi cuts, the Saudis may balk. At the same time, it does not seem economically rational for the Saudis not to cut. Cost-wise, they have the cheap oil. Profits at $80 with an 800K Saudi production cut will exceed profits at $50 without a cut. Why not enjoy the high prices merely by pumping less? This is presumably why Harold Hamm has doubled down. It’s not economically rational for the Saudis to pursue their current course of action.
I predict the same results as the request to cut last fall. Saudi is not going to cut their market share to provide more funds to other countries.
They are investing significantly in future capacity now, while several other OPEC nations are just spending on government programs.
Saudi’s seem to take the longer term view.
The survival of the Kingdom and the discomfiture of Russia and Iran promise longer term profit than the dollars that could be gained next week by reducing production.
“Profits at $80 with an 800K Saudi production cut will exceed profits at $50 without a cut. “
But there’s so much excess capacity a Saudi cut would just be made up at about the same price by others: the price would not go up and the Saudis would come out behind.
Until other producers cut back capacity- or demand rises- there’s no benefit in a cut.