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As long as you have the strength, conditions are not a problem!
Some oil-producing countries just refuse to accept reality. They believe that the way to solve their economic problems in a low oil price environment is to increase production. At this time, organizations such as M are still earnestly warning that under the current new normal of the oil industry, they can no longer seek death.
A report from the International Monetary Fund (M) warns that the new normal in the oil industry will delay the economic recovery of those oil-dependent countries. This will surprise few, except those countries that, in the context of discussions about a production freeze, believe that the solution to their problems is to increase production.
On Monday (Sunday), according to the Saudi official media Saudi Press Agency, the Saudi Economic and Development Affairs Council (D) canceled projects worth up to one trillion Saudi riyals (approximately 100 million U.S. dollars), believing that these projects are not expected to be completed. It will accelerate Saudi Arabia's economic growth or improve people's living standards, which is inconsistent with the expected economic and development returns. Oil prices have been hovering at low levels for two years, putting tycoons like Saudi Arabia, the world's largest oil exporter, under financial pressure.
The M report pointed out that for those countries that rely on oil revenue, factors triggering the continued depression include not only the ongoing supply glut, but also the continued production of U.S. shale oil, the significant decline in oil demand in developed countries, and the strong Dollar. In addition, although oil demand is growing, the growth rate is not enough to offset the combined effects of negative factors.
It is worth pointing out that this longer period of low levels occurred amid significant investment cuts in the energy industry. Energy consultancy Wood Mackenzie (MZ) last week pointed out that continued investment cuts of about US$100 million are needed this year and next, which will reduce production by 10% this year and 20% next year.