Saudi Arabia: first thoughts on the implications of the OPEC deal

Last night’s OPEC deal to cut output is short on details, although our sense is that it’s unlikely to be a game-changer for Saudi Arabia, even if it shoulders most of the burden of the fall in production. The deal does show that the Saudi authorities have moderated their opposition towards coordinated action in the oil market. But we remain of the view that the Kingdom will continue to tolerate relatively low oil prices and pursue fiscal austerity to adjust instead.