OPEC reviews progress towards production cuts and European populists hold a summit in Germany.
OIL PRODUCERS REVIEW PRODUCTION DEAL
OPEC ‘s monitoring committee will meet in Vienna on Saturday to assess compliance with December’s agreement on capping oil production. The deal, which involves non-OPEC behemoth Russia, aims to reduce production from 34 to 32.5 million barrels per day in an attempt to boost prices.
Saudi Arabia is responsible for 40% of the pledged cuts, meaning its compliance will greatly influence the deal’s implementation. Riyadh’s desire to fund programs related to its Vision 2030 plan to reduce its dependence on hydrocarbons is expected to incentivise its conformity with the historic agreement, at least in the short-to-medium term. The Kingdom has already reduced output to below the agreed 10.05 million barrels and is planning deeper cuts in February.
But because the OPEC deal only limits production, rather than export volume, its impact on oil prices is being called into question. Oil-producing countries may decrease production by restricting domestic use (or subsidies) rather than exports, thereby maximising export revenues. If oil export volumes aren’t reduced, prices may not climb as high as OPEC desires. The resurgence of US shale, which experienced its largest supply increase since May 2015 earlier this month, will further depress prices. A price of $50 to $55 per barrel is looking the most likely over the next year.
EUROPE’S POPULISTS HOLD SUMMIT
A nine-member bloc of right-wing European parties will meet in the German city of Koblenz on Saturday.
The Europe for Nations and Freedom group, comprised of France’s National Front, the Alternative for Germany, the Dutch Party for Freedom, Italy’s Northern League and others, all run on deeply Eurosceptic and anti-migration platforms.
While AfD chairwoman Frauke Petry will attend Saturday’s summit, senior spokesman Joerg Meuthen won’t, sparking rumours of a party split. Meuthen’s hesitance to travel to Koblenz stems from the German right-wing’s historic aversion to being associated with anti-Semites; France’s National Front has a history of anti-Semitism, although since taking the leadership in 2011 Marine Le Pen has reigned this in.
Meeting organisers have stirred controversy by banning a number of media organisations from covering the convention, prompting threats of legal action from German network ARD.
Coming less than 24 hours after Donald Trump’s inauguration, Europe’s populists will have their eyes on the halls of power too. Of the nine member parties, Marine Le Pen’s National Front has the best chance of electoral victory in May, although a strong challenge from the centre-right is likely to thwart her chances.