ANALYSIS: Opec is losing its battle to balance the market — but has a reason to keep on fighting
The prospect of higher revenue is likely to motivate Opec members to stick with output cuts or even deepen them, writes Alex Lawler
London — With world oil inventories swelling despite a global pact on cutting output and crude prices falling by a fifth in the past month, Opec appears to be losing its battle to balance the market. But there is one crucial fight the oil-exporting group has been winning so far: its members have earned more money this year than last and the prospect of higher revenues is likely to motivate oil cartel Opec to stick with output cuts or even deepen them. Opec’s first output cut in eight years has earned the group $1.64bn a day so far this year, up more than 10% from the second half of 2016, according to Reuters calculations based on Opec figures for average production and its crude basket price up until June 20. Compared with the first half of 2016, when oil prices sank to a 12-year low near $27 a barrel, the increase in income is a dramatic 43%, even though production by Opec was little changed. Income could rise in the rest of the year if, as Opec hopes, a supply glut is banished. Op...
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