OPEC decided to maintain deeper cuts for the next few months, but it also decided to delay until June a decision on whether or not to extend the supply curbs.
When OPEC and its non-OPEC partners announced the new round of production cuts last December in Vienna, it also said that it would revisit the agreement in April. The meeting was intended to assess the progress of the cuts, take stock of the oil market, and decide whether or not to continue the agreement.
Now, OPEC feels it needs to kick the can down the road. Saudi oil minister Khalid al-Falih said that because the oil market will probably remain oversupplied through the first half of the year, it would be premature to try to make a decision in April.
Some analysts aren’t quite as pessimistic as the Saudi oil minister, but delaying a decision makes sense, and not just because Riyadh thinks the market is dealing with too much oil. The biggest reason to delay any action is that the waivers on Iran sanctions are set to expire in May and the Trump administration has to decide whether it wants to extend them, extend some of them, or go for broke by letting them expire.
The Trump administration has sent contradicting signals on this issue in the last few weeks. The Trump team’s lead envoy on Iran sanctions, Brian Hook, said in Houston earlier this month that the degree to which the U.S. government tightens the screws may hinge on Venezuela. Hook’s comments, made at the IHS CERAWeek…