While there is a long list of potential factors that could surprise the market in 2019, OPEC+ supply curbs create a tightening baseline that should lead to higher oil prices as the year wears on.
Responding to a looming period of oversupply, OPEC and its non-OPEC allies agreed to cut production through the first half of 2018 of 1.2 million barrels per day.
If it occurs, the production cut would be a dramatic about-face compared to six months ago, when Saudi Arabia and Russia signaled their intention to lift output to ensure the oil market did not overly tighten.
Perry Meets with Russian and Saudi Energy Ministers to Blunt Impact of Iran Sanctions on Oil Markets
Renewed Iran sanctions will coincide with election season, granting Russia and Saudi Arabia leverage in negotiations with the United States.
Tehran has limited options to dodge sanctions, most of which are a redux of its 2012 strategy.
Iran and Russia's scaled-down agreement faces long odds, but isn't dead yet.
There once was a time when OPEC did not need to rely on outside producers to achieve its policy goals. That time has passed. The old OPEC is dead, and OPEC+ now stands in its place. What will its reign bring?
OPEC fudges the details. Oil prices rose on Friday in reaction to OPEC's decision to increase output during the second half of the year. Analysts argue that the cartel's actions will not be sufficient to meet the markets' needs.
Market watchers are not sure Iran’s participation in an OPEC agreement is necessary. The Saudis are determined to increase supply, with or without Iran’s agreement.
Given the group’s discord, it’s unclear if OPEC+ will sufficiently handle the current complex market situation, which is experiencing a number of fast-moving events, such as lost supply in Venezuela, Libya, and other producer nations.