Saudi Arabia could start cutting output faster than expected

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Saudi Arabia could start easing its production cut faster than oil market participants think, as the world’s biggest crude oil exporter threatens to destroy demand due to high prices, according to consultancy Rapidan Energy Group.

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Earlier this month, Saudi Arabia extended its 1 million b/d cut through December. Production levels will be reviewed monthly until the end of 2023.

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According to Rapidan Energy Chairman Bob McNally, Saudi Arabia would likely start easing the cuts faster than investors think, as it would not need to overheat the market.

“They don’t need to overadjust the market intentionally, because if there’s an increase, then demand collapses, and it collapses,” McNally told Bloomberg Television in an interview Thursday.

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Last week, Warren Patterson, head of commodity strategy at ING, said that even if emerging oil costs had “more room to maneuver,” a break above $100 a barrel for Brent would be sustainable.

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“OPEC will continue to review cuts from sources on a monthly basis, so it is quite possible that we will see the organization — or at least Saudi Arabia — ease its additional voluntary cuts this year, which would help ease some tension in the market. “

By Tsvetana Paraskova for Oilprice. com

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