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City AM speaks to Natixis’ Abhishek Deshpande on potential OPEC and Russia deal

03cdc0e1a48d0085cf209f9e1439eb50_400x400OPEC’s dominance as the world’s foremost oil producer has been gradually eroded by technology advances in expensive shale oil drilling over the last two decades, from 60% to around 30% – mostly from the US and Russia.

In light of this, a deal between Russia and OPEC to reduce output has been suggested. However, Abhishek Deshpande, lead oil analyst at Natixis, told City A.M in a recent interview that “A decrease in Russian production without cutbacks in the US is meaningless. If they reduce then the US will continue at full force.”

Indeed, US oil companies are under increased pressure since the US Federal Reserve voted to raise interest rates for the first time in almost 10 years. This decision has meant that there will be an increase in the cost of financing producers, so if banks stop lending to the firms, then many could go under.

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