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Oil Experts React To OPEC+ Production Cuts

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Oil Experts React To OPEC+ Production Cuts

The oil price war came to an unofficial end after the world's largest oil producers, the OPEC+ group, said they collectively cut their output by 9.7 million barrels of oil per day. Here's how multiple experts reacted to the latest developments.

Senator Says Deal An Important First Step For Oil Prices 

The most notable take away from the OPEC+ deal is that it will put an immediate end to the global oil price war, Sen. Dan Sullivan (R-Alaska) said Monday on CNBC's "Squawk Box."

The agreement will "hopefully" put an end to the "massive" job losses the oil sector is experiencing in Alaska, he said. 

While the weekend's agreement is a good first step, "implementation is going to be key," Sullivan said.

Sullivan said that he and a handful of other senators made it clear to Saudi's ruling family that failure to make changes would be viewed as an attack on their constituencies. 

The American government could go so far as to review its strategic relationship with Saudi Arabia, including keeping American soldiers on its soil to protect the country, he said. 

Cuts Not Large Enough? 

OPEC+ didn't go far enough in its production cut, because the demand for oil has fallen by as much as 20 million barrels per day this month, Energy Aspects' Amrita Sen said on CNBC's "Worldwide Exchange."

Actual cuts to production could prove to come in at around 7 million barrels per day due to the "Olympic math" OPEC+ uses, she said.

The baseline used for the recent round of production cuts is October 2018, although Saudi Arabia, as an example, is using 11 million barrels as its baseline, although its actual production was around 12.5 million barrels, Sen said. 

Trump 'Part Of The Club'

U.S. President Donald Trump previously viewed low gas prices as a form of a "tax cut" for the American consumer, but the OPEC+ deal suggests he started to view oil prices as a "national security issue," IHS Market Vice Chairman Daniel Yergin said on CNBC's "Street Signs Asia."

In fact, the oil agreement marks the "biggest and most complex" deal made by Trump, Yergin said. Trump also had to double as a mediator to fix the relationship between Russia and Saudi Arabia, he said, adding that Trump is now a de-facto "part of the club." 

Related Links:

Oil Gains, US Equities Fall As OPEC And Allies Agree To Lower-Than-Expected Production Cuts

OPEC+ Agrees To Historic Deal To Cut Oil Production

 

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