Will oil price shoot up again?

NEW DELHI: Brent crude oil traded below $70 last Friday, fuelling consumer hopes of a cheaper retail price of petrol and diesel after months of rising cost. The fall in price was attributed to the lower impact of US sanctions on Iran due to the exceptions it gave to India, China and other nations, as well the increased oil production by the US, Saudi Arabia and Russia.But the relief may not last if some oil producers have their way.
Friday marked the 10th consecutive day crude oil prices fell. But cheaper crude oil means lower profit for oil producers, and thus countries such as Saudi Arabia are now mulling a cut in production — which would go against their earlier promise of increasing production.

The worry: The Organization of the Petroleum Exporting Countries (Opec), which includes Saudi Arabia and Iraq and Iran, and other non-Opec oil producers such as Russia met in Abu Dhabi on Sunday to discuss oil cuts. They worry that a continued fall in crude oil price will cause a 2014-16 style oil crash when oil price dropped 70%, in large part due to the US shale oil boom.
The crash deeply impacted oil producers, with Saudi Arabia's fiscal deficit rising to 16% of its GDP — meaning lesser money for infrastructure, defence, and its social projects such as free medicine for citizens and so on. Before the latest price drop, Saudi was targeting a deficit of 7.3% its GDP.
Turn about: Opec members and its 10 allies are mainly worried about the increasing US production (11.4 million barrels a day). But they can't force the US to lower production so they are considering reversing their pledge to increase production.
Since May, Opec production has risen 820,000 barrels a day, and Russia's output increased from 440,000 barrels a day in May to 11.4 million b/d in October. The oil producers could agree (though Russia doesn't want to) to reduce the output to somewhere between the May and October figure (say a cut of up to 1 million) — cutting all the way to May level may attract the wrath of Donald Trump.
When? Sunday's discussion was not an official Opec meet, and hence was more of a brainstorming. But the next official Opec meet is on December 6, and the narrative from Sunday would drive the agenda then. That could mean oil price could once again be the talk of the town as India heads to the general elections.