A dramatic few days in Vienna culminated in a major readjustment of the Opec+ production cuts that sought to address concerns over a looming supply glut in 1H 2020, combat “cuts fatigue” and ease the burden on Saudi Arabia. Is the net result significantly deeper cuts? That’s broadly in the eye of the beholder, but what is certain is that market hopes of an agreement to extend cuts beyond the end of Q1 next year have been dashed.
The headline number is 503,000 b/d, which is the additional cut that the Opec+ consortium signed up to. The 21 countries subject to production allocations agreed to increase the scale of their cuts (broadly from an October 2018 baseline) from 1.2mn b/d for 2019 to 1.7mn b/d for 1Q 2020. But there are some key caveats. (CONTINUED - 1002 WORDS)