We have been witnessing crude price weakness since mid-2014 following an oversupplied commodity market. Over these years, big energy players suffered and touched 52-week lows. They are saddling a huge debt load and have been compelled to divest prospective oil resources.
Then, the million dollar question crept up –– what measures should oil producing nations take to help crude to go back to its previous glory? The most obvious way out is to lower the output of the commodity as the market is witnessing plentiful supply. Naturally, all eyes are on a probable oil production cut agreement that The Organization of the Petroleum Exporting Countries (OPEC) may seal this month.
This isn’t all that oil producers are keeping their fingers crossed for. The Iranian oil minister has now raised hopes that crude could touch $55 per barrel if the accord is signed.
Oil Over $50 Again?
OPEC is expected to come up with a deal on Nov 30 for oil production cut, one of the prime measures that analysts think could restore crude amid oversupplied commodity market. The cartel, which controls more than one third of the oil in the world, is now looking to strike an accord to lower production by up to 700,000 barrels per day.
OPEC believes that the move to prop up oil prices will also depend upon the support of non-OPEC members like Russia. In fact, Bijan Zanganeh – oil minister of Iran – expressed optimism that if an agreement could be reached by OPEC members on Nov 30, oil could cross $50 per barrel mark.
He further added that if non-OPEC members support the production curb, crude could touch $55 per barrel level again. Indeed, Russia announced that it will support the decision of OPEC to restrict oil production.
What’s in Store for Oil Companies?
The performance of energy players, especially the upstream companies, depend on oil prices. Higher the commodity price, greater the revenue generation for the companies after selling crude at higher prices.
Definitely, if both OPEC and non-OPEC members agree on the production-curb deal, crude price will move up, ushering on good news for oil exploration and production players like Matador Resources Company (MTDR - Free Report) , Apache Corp. (APA - Free Report) , EOG Resources, Inc. (EOG - Free Report) and SM Energy Company (SM - Free Report) .
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