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As the group doubles down on its production cut, questions linger about exit strategy, capability, and size.
Iranian oil output has come a long way since the nuclear deal went into effect and tough sanctions were lifted in January 2016, but the outlook now very much depends on the outcome of the May 19 presidential election.
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.