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Hansen: Mounting pressure may force OPEC to consider cuts

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18 months of low oil prices are putting serious fiscal pressure on many OPEC members, including wealthy Saudi Arabia, and could force the cartel to consider production cuts if prices do not recover next year, says Saxo Bank’s Ole Hansen.

A draft report of OPEC’s long-term strategy obtained by Reuters reveals that internally members are fighting over the need to support a fair oil prices and boost revenues as oil prices have more than halved to below USD 50 a barrel since June 2014.

Saudi Arabia generates 90% of its income from oil production and the slump in revenues has caused country’s budget deficit is to grow so much that the International Monetary Fund last month warned Saudi Arabia could face bankruptcy in five years if there is no oil price recovery.