OPEC Gets the Deal – Market to Cut by 1.8mbpd


In reality, it could have gone either way. So easy for market followers to dismiss any incentive that OPEC may try to implement but the true resolve was there and members fell into place and with that, Russia came too.
The success overtook the mistrust between leading members and non-OPEC producers with the realisation that the cartel and its competitors may never again have such an opportunity to unite for a common course and share out the spoils of the market. How long it will last for is another matter and only time will give the answer.

Each member country has accepted an output ceiling with Saudi taking the largest cut followed by Iraq and Iran. Libya and Nigeria have been exempted and Indonesia which had just rejoined OPEC has once again left the cartel. The total cut for OPEC will be 1.2mbpd based primarily on October figures but not effective until January and this will be the first cut since 2008 but the next surprise came with the announcement that Russia would actually cut by 300,000 leaving other non-OPEC producers to be responsible for the remaining 300,000. Supposedly OPEC members have signed up to the deal but it seems to be contingent on Russia and other non-OPEC producers formally signing too, to make the deal effective.

John Hall

John joined Alfa Energy in 2013 as Chairman, where his specific interest is the development of the company’s profile in the areas in which it primarily operates - across the EU and the US. He is Fellow of the Energy Institute, a Member of the Parliamentary Group for Energy Studies, an Associate Member of the Chartered Institute of Purchasing and Supply, and a Member of the Market Research Society. He began his long career in the industry when he set up John Hall Associates in 1973, a company which merged with Energy Quote in 2009 and currently trades as Energy Quote JHA.