25/05/2017 World Business Report

Can OPEC fire up the price of oil without fuelling its US shale

India's finance minister defends his decision to scrap

the country's most popular banknotes.

He tells us why the days of cash-in-hand are over.

Also coming up - a record close again on the S

We'll be getting the latest from the region.

It affects us all - and its future direction could be

decided later today at a meeting of the world's top producers.

We are talking about OPEC, the Organisation of the Petroleum

That's the Gulf countries led by Saudi Arabia,

as well as others including Iraq, Iran and Nigeria.

They have been joined by non-OPEC member Russia

and they are expected to announce a deal later today to try

In December OPEC and non-OPEC countries agreed to cut

production by 1.8 million barrels per day -

about 2% of the global total - to try and push the price up.

Those cuts were for a six month period which expires soon.

They are now expected to extend the cuts for another nine months

Look at this graph of Brent Crude and you will see why.

The price surged in December when those production

But it's been volatile since then and struggling to hold

Russia can cope with this level - Moscow has based its budget

But the biggest OPEC producer Saudi Arabia wants $60 per barrel.

Shale oil production in the US fell sharply when prices hit rock bottom

Now prices are higher they are back in a big way

You can see US production has surged by a million barrels a day over

the past year, adding to a global oversupply of oil.

Earlier, Saudi minister was confident.

TRANSLATION: All the countries within OPEC, which I have talked

to have agreed on a nine-month extension.

Definitely there is no need to talk to all the 24 member states,

however, I do not expect any objection within OPEC to be

the issue, but the decision will not be finalised until OPEC meeting

on May 25 when all the countries sign on the extension decision.

Colin Smith is Director of oil and gas research at Panmure Gordon.

Good morning. Give us your take? Are we looking at a deal today? Yes, it

looks likely there will be a rollover and all nine months rather

than six. Compliance from OPEC has been pretty good but US oil has been

surging and that is one of the major concerns the market has. If you look

at where OPEC is producing at the moment, it looks like the world is

about a million barrels a day short so we should be seeing signs of that

effect. But what is dependent is what US production does and what

happens in Libya and Nigeria who are not subject to the cuts that applied

to everyone else. In terms of the price, what impact would a

nine-month roll over have? Would US production be encouraged all the

more Bass I think it will. Do not think this rollover will push prices

higher than we have stopped what will make a difference is as we go

forward into the second half of the year, how much more volume do we get

out of the US and to restart the seat even trees falling in the way

that supply- demand valances suggest we should. If that is the case, but

are we looking in terms of the new normal for oil? I think the new

normal could be in the mid- 50s or a little bit higher. There are

possibly early signs that continuous growth and productivity is beginning

to roll over a little bit so that is the big question. Whether this rings

so much new US production that it overwhelms the market as it did in

the run-up to 2013. As and when we hear of a deal where will update

you. Oil prices have been on the rise in Asia ahead of that meeting.

Rico Hizonis following the markets for us in Singapore.

The prices of oil in midday territory, we currently in positive

territory. Reduces within and outside OPEC are expected to extend

a deal cutting output and lifting the price of crude. Analysts feel US

producers could spoil the party. Brent crude trading at about 55

cents, above 1%. More than 50 cents, up 1% fall at their US sources.

Apart from the oil markets, we are seeing movement in the

foreign-exchange market, the US dollar on the defensive after some

policy expectations were dumbed down. Edging up to a six-month high

while the yen is moving sideways. Holding of raising interest rates

until the recent economic slowdown is proven to be shot term.

The White House has denied accusations that the President's

budget proposal contains an "egregious" maths error.

Former US Treasury Secretary Larry Summers pointed out the spending

plan double-counts $2 trillion of extra federal revenue -

which is earmarked both to cut taxes and to reduce the budge deficit.

But White House budget director Mick Mulvaney told reporters:

The budget unveiled on Tuesday proposes deep cuts

Sports car maker Aston Martin has posted a first-quarter profit

Revenues in the first three months of the year more than doubled,

following strong sales of its new DB11 model launched

Aston Martin was sold by Ford in 2007 to Italian

The company has gone bankrupt seven times in its history.

It's reported to be considering a stock market flotation

In India - remember how its economy was plunged

into chaos last November when the government scrapped the two

most popular banknotes - the 500 and 1000 rupee notes.

The controversial idea was to break the black economy

by forcing people to exchange their stashes of notes for new ones

at banks and bringing them into the tax system.

Well according to Finance Minister Arun Jaitley,

despite heavy criticism at the time the move has been a success.

As he explained to the BBC's Lerato Mbele.

I think it is successful from three important ways - one, there is a

huge movement towards digitisation of the economy. Something which

marginally existed in the past. Two, the number of people now filing tax

returns has radically gone up so the anonymity which was attached to

catch Karen C is over. It has been identified who owns the currency. --

cash economy. You will be releasing your GDP figures next week. Will you

now calibrate everything and get a sense of how diverse economic

participation is, do you think it will reflect the figures? When we

took the extraordinary step of the monetisation we knew that would be a

squeeze as far as currency is concerned. But we were sure that the

impact is only marginal. Our critics felt there would be a radical

decline as far as the GDP was concerned and that it was too risky.

Hopefully, that she continued to roll about 7%. I will see it in a

moment for the News review. Two teenage victims of Monday's

bombing had travelled to the pop concert from the island of Barra,

in the Outer Hebrides. Her friend Eilidh MacLeod

is still missing.