After Trump victory, OPEC deal becomes more urgent

The Organisation of Petroleum Exporting Countries (OPEC) was already struggling to finalise a deal on production cuts this month. And then Donald Trump was elected President of the US. The OPEC faces increasing urgency to take measures that will support oil prices as Trump’s surprise victory threatens to deepen a market sell-off, said UBS Group AG. Yet, the uncertainty arising from the President-elect’s policies - from climate change to the US shale industry and sanctions on Iran - will make resolving differences between producers even harder. “The pressure on OPEC to come up with a deal only increases in the wake of Trump’s victory,” said Giovanni Staunovo, an analyst at UBS in Zurich. “Even though the oil market is rebalancing, the political uncertainty in the short term leaves oil prices vulnerable to downside, that makes it more urgent for OPEC to act.” Oil prices had already retreated about 15 per cent since October on growing doubts that OPEC could finalise the Algiers accord at its November 30 meeting amid a refusal to cut output from almost a third of its members. US crude initially slumped to near $43 a barrel in New York on Wednesday after Trump, a real-estate mogul and reality-television star, was elected, but later erased losses as a global sell-off of risky assets abated. (Grant Smith, Angelina Rascouet and Javier Blas/Bloomberg)

More from Business News