With oil coming off its worst month in over a decade, it maybe be up to the Opec oil cartel to stop the slide when they sit down for a meeting next week to discuss production levels.
The key to the meeting will be whether Saudi Arabia jumps on board and agrees to production cuts as this should lead many other countries to follow suit but the danger is the Saudi’s face the risk of upsetting US president Donald Trump who has been lobbying for Opec to refrain from reducing production.
"The one cloud over this is really Saudi Arabia and their relationship with Trump. President Trump has made the explicit ask to Saudi Arabia to keep the taps open, so at the eleventh hour that they potentially try to force the Saudi crown prince to keep the barrels on the market. I think that's the big concern." said Helima Croft, global head of commodity strategy at RBC Capital Markets.
But Croft believes the Saudi’s and other Opec countries overall will make the decision to look after their own economies and agree to production cuts and disregard the potential consequences with Trump
"What we really need to get on the path to $60 is we need to see a substantial cut coming out of OPEC. We anticipate that OPEC will pull a significant quantity of barrels, at a minimum a million barrels." Croft said.
We may see some other cuts in the nearest future from US producers if the price of oil continues its downtrend as the cost of exploration makes it unviable to make a profit which wil force some drillers out of business.