• 2 minutes Rational analysis of CV19 from Harvard Medical School
  • 4 minutes While U.S. Pipelines Are Under Siege, China Streamlines Its Oil and Gas Network
  • 7 minutes Renewables Overtake Coal, But Lag Far Behind Oil And Natural Gas
  • 4 hours China wields coronavirus to nationalize American-owned carmaker
  • 49 mins Joe Biden the "Archie Bunker" of the left selects Kamala Harris for VP . . . . . . Does she help the campaign ?
  • 10 hours Open letter from Politico about US-russian relations
  • 1 day US will pay for companies to bring supply chains home from China: Kudlow - COVID-19 has highlighted the problem of relying too heavily on one country for production
  • 3 days Trumpist lies about coronavirus too bad for Facebook - BANNED!
  • 21 mins COVID&life and Vicious Circle: "Working From Home Is Not Panacea For Virus"
  • 3 hours Trump Hands Putin Major Geopolitical Victory
  • 10 hours Oil Tanker Runs Aground in Mauritius - Oil Spill
  • 19 hours Trump is turning USA into a 3rd world dictatorship
  • 3 days China's impending economic meltdown
  • 2 days Liquid Air Battery
  • 2 days What the heroin industry can teach us about solar power (BBC)
  • 3 days The Truth about Chinese and Indian Engineering

OPEC Deal Looks Shaky Despite ‘Good’ Compliance Rate

The oil markets were boosted overnight by the news from the International Energy Agency (IEA) that compliance to the schedule of cuts agreed by OPEC to start on January 1st this year was at record levels. Those unfamiliar with the workings of OPEC may be surprised to learn that those “record levels” are only 90%. Surely, you might think, compliance with something like that, agreed by all the parties to the cut, should be 100%. You may also think that cutting output by “only” 2% would mean that everyone could do their part. If either of these things occurred to you though, you are unfamiliar with OPEC’s history. The last round of cuts, back in 1980 for example, saw only 80% compliance and 2% is the largest reduction ever called for.

As always with OPEC, however, the devil here is in the detail. Overall compliance with cuts is one thing, but what will decide the future of this agreement is the distribution of those output restrictions, and when that is considered the future is not quite as rosy as the market reaction this morning might suggest. Venezuela, for example, who were among the first countries to push for OPEC action have achieved a whopping 18% compliance with their scheduled cuts.

Venezuela, of course is a drop in the bucket in terms of global oil production, and if you could administer truth serum to the other OPEC oil ministers I doubt that any of them really expected the Venezuelans to conform to the agreement. That said…




Oilprice - The No. 1 Source for Oil & Energy News