Oil: with no OPEC agreement, producer states' trade balances at risk

Oil: with no OPEC agreement, producer states' trade balances at risk

Emilio Fabio Torsello
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From Saudi Arabia to Russia and Venezuela, major crude exporters are seeing heavy trade deficits due to the persistent decline of oil prices

According to a report issued by financial institution Goldman Sachs, the price of oil may slide to 40 USD per barrel if OPEC fails to reach an agreement on output cuts. The report states, "The lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal on November 30. […] The lack of an agreement so far has pushed oil prices sharply lower, with weakening oil fundamentals warranting oil prices in the low $40s a barrel in our view if OPEC is unable to deliver a convincing agreement."
The repercussions are already being felt in historic crude oil exporter states like Saudi Arabia. That country’s minister of finance, Ibrahim Al-Assaf, was dismissed from office on Monday after serving in the post for twenty years. The royal government does not believe him capable of adequately responding to the oil price crisis. He has been replaced by Mohammed Al-Jadaan, until recently head of the kingdom’s Capital Markets Authority.
Things may take a similar turn in countries like Russia and Venezuela. Revenues from crude oil, natural gas and petroleum products account for 68% of the former’s exports. For Venezuela that figure is a whopping 95%.