This decision has been based on the extreme volatility and the lack of liquidity of oil futures which are leading to a decorrelation in the price with the fundamentals of supply and demand. For that reason, OPEC+ could see itself obliged to reduce output.
- Saudi Arabia is the largest crude producer in the world and the member with the biggest weighting in OPEC. The country’s oil production is around 9 million barrels per day.
Valuation:
A positive impact. Saudi Arabia’s hints at a possible cut in output due to the current decorrelation between the price of oil and the supply-demand, is good news for black gold prices. So there will be fresh upward pressure on crude. We should remember that for Repsol, the variations in a dollar of oil implies an impact of 75 million euros on EBITDA and 54 million on Operating cash flow.