OPEC's oil production alliance appears to be on shaky ground, and crude prices continued a weeklong dive, as Saudi Deputy Crown Prince Mohammed bin Salman visited the White House on Tuesday.
Bin Salman represents the new face of Saudi Arabia, and he is the draftsman of a plan to reform the kingdom and diversify it away from oil. He is also seen as a key figure backing the deal between OPEC members and nonmembers like Russia to curb production and stabilize the market price. In Washington, among the topics he was expected to discuss were the war in Yemen and the Iranian nuclear deal.
Analysts say while it appears to be frayed, there is a good chance OPEC and its partners will ultimately keep their deal intact and extend it, because oil in the low $40s per barrel would strain the budgets of producing nations and make it much more difficult for the types of reforms that the deputy crown prince is trying to achieve. But between now and then, oil prices could be rocky. OPEC members have said they would assess extending the agreement to cut 1.8 million barrels in production when they meet in May.
Another thorn in the side of the deal between the Organization of the Petroleum Exporting Countries and other producers has been the U.S. shale industry, which has turned the pumps back on as the production deal pushed oil above $50. The U.S. is now producing more than 9 million barrels a day. A surge in supply in the weekly U.S. inventory data helped kick off what's been a more than 10 percent decline in oil prices. Al-Falih last week said OPEC welcomed shale drillers back to the market. But he also said he is monitoring the activity.
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