Citibank: If OPEC not makes final decision, crude prices would collapse

Baku. 15 November. REPORT.AZ/ The Saudi- and Russia-led supply limits that have lifted crude oil to a 2 1/2-year high must be prolonged for an extended period or prices will collapse.

Report informs, global head of commodities research at Citigroup Inc Ed Morse said.

Investors already are assuming OPEC and its allied producers will agree in late November to extend the limits well beyond their March expiration, Morse said at a gathering of energy economists in Houston on Monday.

Morse characterized the historic 2016 rapprochement between Saudi Arabia and Russia that helped lead to the output limits as a “bromance,” and said anything short of a decisive step moving forward will disappoint traders and trigger a massive unwinding of long positions in the futures market.

That includes adopting half-measures, such as extending the deal by just a few months or delaying a decision until next year, according to Morse. For traders, “it’s logical to do the extension,” he said. “Otherwise, it’ll trigger a sell-off”.

Notably, Russia, Saudi Arabia, Iraq and Oman have already supported extension of the agreement by late 2018.