OPEC’s ability to balance the market has many naysayers amid stubborn stockpiles, rising US production and the same old tactics of output quotas that typically sooner than later fall apart. But this producer pact is a very different phenomenon: one that doesn’t just have non-OPEC countries on board, but has organized joint monitoring committees to fully track compliance with production cuts and a strong collective communication (including regular technical meetings and ministerial dialogues). This has fostered a sense of togetherness among oil producers that usually are more interested in competing for market share. As a result, this new producer alliance could be here for the long haul. OPEC is on the cusp of overcoming one of its biggest challenges: convincing a skeptical, and often myopic, market that it has changed. The overplayed narrative of OPEC versus US shale has distracted market watchers from where the real overproduction has stemmed from: OPEC itself. OPEC, led by Saudi Arabia, flooded the market with an additional four million b/d of crude with its pump at will strategy after November 2014, according to the S&P Global Platts survey. Since this approach led prices to crash, OPEC reversed course, and in November 2016 instituted its
Continue reading OPEC-plus: Old strategies, new manifesto – Fuel for Thought. This article appeared first on CTRM Center.
Source: CTRM Center