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Saudi Wants OPEC To Deepen Oil Production Cut

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Saudi Arabia wants OPEC to deepen oil production cuts in order to anchor oil prices before Saudi Aramco's initial public offering.

The deal reportedly to be discussed by the Organization of the Petroleum Exporting Countries and other producers, known as OPEC+, would be to add about 400,000 barrels per day to existing cuts of 1.2 million bpd. The current deal runs to March 2020.

Saudi Arabia is expected to use its position in the organization to force other members to agree to new oil production limits. The Arab country is also reportedly ready to cut its own output even further if needed.

The latest OPEC analysis, drawn up by OPEC's Economic Commission Board (ECB), showed a large oversupply and build up in inventories in the first half of 2020, if no additional cuts were made.

The Saudi-led OPEC is set to meet with a 10-nation coalition led by Russia on December 5 and 6 in Vienna. The oil exporting countries will make a decision to whether curb the production or not then. However, the discussion will be influenced by the upcoming IPO of state-run Aramco, which is set to announce the pricing of its shares on December 5. The Arab country will want make sure that oil prices stay high enough during Aramco's IPO.

Meanwhile, Saudi Arabia will face opposition from Russia, a non-OPEC country, who has opposed deeper cuts or a longer extension.

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