OPEC meets on Wednesday to talk about cuts in oil production but it's outcome, which will likely impact global crude prices, is very uncertain. Jeanne Yurman reports.
Consumers worldwide have been enjoying low oil and gas costs as the globe swims in an oversupply of crude. This week's semi-annual meeting of the Organization of Petroleum Exporting Countries or OPEC could change this...or not. The question: can this group, which accounts for 40 percent of global production, agree to credible production cuts outlined in September? Robert Yawger of Mizuho Securities is doubtful. SOUNDBITE: ROBERT YAWGER, DIRECTOR FUTURES DIVISION, MIZUHO SECURITIES USA (ENGLISH) SAYING: "The most unlikely scenario is that there is a really good agreement with quotas allocated to every member of the OPEC fraternity and it's a verifiable deal where it's held to those quotas, where there's checks and balances to make sure those production numbers are held to and all works out the way it's really supposed to do." Yawger has upped the odds of no deal to 35 percent with non-OPEC producer Russia resisting cuts and OPEC members Saudi Arabia and Iran remain wildcards. With no deal, analysts predict oil prices will correct sharply - going as low as $35 a barrel. Conversely if a deal is reached Yawger says oil could jump to the low 50's - it's price volatile for a bit, but then as cracks in the agreed-to terms appear it will fall back again to the mid 40's where it's currently trading. The impact of oil prices will be significant with the new US administration. Trump has vowed to loosen regulations in the U.S. and increase domestic production - efforts that make sense only if prices rise overseas. Right now oil is cheap to import.