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Predicting The Result Of The OPEC+ Meeting

OPEC

Media reports have been awash with speculation this week, some pointing to the inevitability of a production cut extension, some highlighting the growing tensions in the Russia-Saudi Arabia-Iran triangle and some advocating a gradual return towards a free-for-all competition against the background of Iran and Venezuela sanctions. If one is to analyze the current economic state of leading oil producers, then everything is indicative of an OPEC+ extension – Russia, Saudi Arabia, Iraq and others are afraid of oil prices tanking, all the more so after the developments of the last couple of weeks. But let’s look at them one by one, so that you see it for yourself.

First, one has to highlight how effectively did OPEC+ manage to adhere to the set production caps. Whenever output discipline was needed, all major producers complied with the Vienna Agreements; whenever the oil market allowed for a production ramp-up, Saudi Arabia, Russia and the UAE did so, only to scale it back under the 2019 production ceiling (it took Russia 3 more months than others, yet this came as no surprise as Moscow generally shrinks from cutting rates in the winter). The exception only proves the rule - Iraq has been something of an enfant terrible of OPEC but encountered little public scorn due to its post-Islamic State conditions and strategic position vis-à-vis the Iran “problem”.

The root cause for this author’s optimism with regard to a new OPEC/OPEC+…




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