for Saudi Arabia
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It’s not inevitable that oil prices will hit $150, but there should be no surprises if they rally to that level, or higher.
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?
The oil market could be sorely tested in the second half of the year and into 2019, unless demand slows, OPEC outages are less than expected, or non-OPEC producers such as the United States, Canada, and Brazil produce higher than forecast.
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.
OPEC itself is responsible for disrupting the investment cycle and eliminating the inventory overhang in record time. Asking them to fix the problems they caused is the wrong approach.
Global oil markets are in danger of seeing a large supply deficit in the second half of 2018, increasing the need for more OPEC supply.
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.
OPEC members are split over whether to change strategy, as global oil markets are trading just under $80 per barrel and consuming countries are pressuring producers to increase output.