SGH Sees Improving OPEC Ties, Oil Could Reach $45/bbl

February 22, 2016

SGH Sees Improving OPEC Ties, Oil Could Reach $45/bbl
2016-02-22 14:15:35.598 GMT

By Vincent Cignarella
(Bloomberg) — OPEC meeting of tech experts scheduled for March is another step in a “trust-building path” toward
possible output cuts between the organization and key non-OPEC producers that could come into “sharper view” as early as this summer, Sassan Ghahramani, CEO of SGH Macro Advisors, writes in a note to clients.

* If OPEC and Russia resist increasing output as demand rises, a deal for a new, higher equilibrium price “of at least
$45/bbl” is possible with output cuts led by Saudia Arabia, its Gulf Allies and Russia “probably now by late summer
unless there are truly impressive diplomatic breakthroughs or changes in the supply and demand balance in the oil
market,” Ghahramani said in note dated Feb. 19 * Meeting next month will be more important in wake of the
recent oil output “freeze’’ agreement between Saudi Arabia and Russia.

* Underscoring the prospects is the reported invitation to King Salman bin Abdulaziz Al Saud from Moscow to meet with Putin.

* Any deal remains fraught with complexity between the balance of conflicting interests of war in Syria, the fate of Syrian President Bashar al-Assad, and Saudi Arabia’s new Sunni ally Turkey and its dealings with the Syrian Kurds.

* Russians are asserting there is no linkage between Syria and an oil deal, nevertheless an explicit linkage exists; it
will be very difficult politically for the Saudis to proceed with the King’s visit without a cease-fire, he says.

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