CNBC reports that the Russian energy minister has proved a small boost to the oil market by announcing Russia will cut output in March by 200,000 barrels per day, Reuters reports.
Novak says Russia has so far cut output by 160,000 barrels per day and aims to cut 300,000 barrels per day by the end of April. Go to CNBC to read more.
In my opinion, it is unlikely for markets to react positively to statements regarding production cuts.
Trump’s unpredictability creates a lot of uncertainties which make forecasting close to impossible. Without a clear vision, it is rather unreasonable to forecast growth in demand.
Globalisation forced businesses to expand beyond national borders. Therefore, all economies are vastly interconnected, including legal infrastructure. Companies projected their activities respectively aiming for a bigger market share.
The policy of protectionism would certainly affect global economy as it could trigger trade wars and shrink diapason for business opportunities (not to mention the potential for widespread legal disputes).
With less access to the markets, it is logical to assume that business activities would start to decline, resulting in rising unemployment and declining demand.
If Trump’s administration does not revise its policy, ensure consistency in its statements and actions, depart from isolationism and continue to enhance trade partnership, the crude oil production cut alone will make either little or no difference at all.