Stay on top of the latest developments in oil markets, geopolitical risk, and alternative fuel vehicles with the SAFE policy team's Chart of the Week.
Nothing will change materially in the oil market until there’s a significant stock draw, a development that appears doubtful, which could ultimately force OPEC to change strategy once again.
The OPEC commission would examine whether the cartel’s behavior is designed to disadvantage U.S. oil producers and secure market power through anti-competitive behavior.
OPEC agrees to its first production cut in eight years, reminding the market of its enormous power, but the ultimate impact of the cartel's action is far from certain.
Oil markets and analysts have been skeptical that a deal would emerge from this week’s OPEC meeting, following stonewalling from ministers and signals of willingness to walk away without a deal from Saudi Arabia. But cartel members struck an optimistic tone that a deal will be achieved today in Vienna, sending oil prices up by 6 percent.
Any deal is better than no deal for OPEC.
Given the dire straits of OPEC countries’ fiscal situations, the cartel may ultimately take action at its meeting on November 30 to lift prices, a move that would hurt consumer countries. But a production cut isn't a forgone conclusion.
Over the past couple of years, there’s been a string of comments from executives and ministers who want and need higher prices making the case for a tighter market even though there’s little to no evidence of that reflected in the fundamentals.
OPEC is expected to finalize the details of its production cut next month, but in the meantime, the entire arrangement looks like a mess, with hole after hole being punctured before it’s even been fully agreed upon and implemented.
OPEC's past cuts were successful in tightening the global oil market and lifting prices, but the agreement last week in Algiers may not be sufficient to rebalance fundamentals, particularly since U.S. shale is poised to rebound.