Quick Context: OPEC’s Sustainable Shift
The OPEC+ announcement is modestly near-term bearish vs prior expectation but puts the producer group on a far more sustainable production policy footing going forward.
If you’re already subscribed and/or appreciate the free summary, hitting the LIKE button is one of the best ways to support my ongoing research.
OPEC+ delegates met to discuss, among other topics, the fate of three tranches of production cut commitments: Official Cuts (October 2022), Voluntary Cuts #1 (April 2023), and Voluntary Cuts #2 (latter half of 2023).
While a modest near-term oil market disappointment compared to prior consensus expectations given higher production guidance, the multi-pronged deal extension represented a considerable improvement in both the structure and communication of the producer group’s production policy.
Going forward, the deal remains, as always, “subject to market conditions” and questions ultimately remain around what OPEC+—and specifically Saudi Arabia—considers a strong enough market for easing cuts.