ASSESSMENTS

OPEC+ Will Maintain Course Headed Into 2020

Dec 3, 2019 | 21:23 GMT

Members of the OPEC+ coalition are not likely to alter the terms of their production quota deal when OPEC ministers gather Dec. 5 in Vienna, Austria.

(Maxx-Studio/Shutterstock)

Highlights

Most OPEC+ states have accepted that efforts to support higher prices have failed and that it is worth risking a dip below $60 per barrel next year to avoid stimulating growth of competing supplies.
The communique after the OPEC ministerial meeting concludes on Dec. 6 will tout stricter compliance for production targets essentially as a cut of around 500,000 barrels per day, but the reality will be far less.
Russia has played the cartel politics game more skillfully than Saudi Crown Prince Mohammed bin Salman, with Russian production currently at a slightly higher level than when it first agreed to output limits in December 2016.

When they meet Dec. 5-6, the members of the OPEC+ coalition are likely to agree to extend current oil production quotas until at least the end of June 2020 and possibly longer, despite renewed media chatter on Dec. 2 suggesting the Saudis are considering supporting a deeper cut in support of the Saudi Aramco initial public offering. This outcome is at least mildly bearish relative to current market positioning, given the probability of a return to global oversupply in the first half of 2020. Despite being relative price hawks since 2016, Saudi Arabia seems to have accepted that it is not in a position to push others to do more, even as the final IPO price of Saudi Aramco will be determined Dec. 5....

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