OPEC+ Price Spike Will be Short-Lived

Kumar warned, however, that several OPEC+ countries will be “mindful of the practical problems posed by the cartel’s current stance”.

“Deepening or extending cuts is no solution to the issue of oversupply from nations such as the United States, which are not part of the agreement,” Kumar said.

“Furthermore, this problem is set to exacerbate in 2020, which also implies that the OPEC+ group will further lose its share of the oil market,” he added.

“Consequently, this will remain a core issue during the subsequent OPEC+ meetings, which could also threaten the cartel’s unity,” Kumar continued.

Commenting on the latest OPEC+ deal, Ann-Louise Hittle, vice president of macro oils at Wood Mackenzie, said the fact that the agreement runs to March could reduce its “supportive impact” on the market.

“However, the proactive, short-term management of the market OPEC+ is signaling is supportive overall to the outlook for 2020 and should avoid a significant downturn in prices,” Hittle added.

Latest OPEC+ Deal

The seventh OPEC and non-OPEC Ministerial Meeting held last Friday decided for an additional adjustment of 500,000 barrels per day, leading to total adjustments of 1.7 million barrels per day.

In addition, several participating countries, mainly Saudi Arabia, will continue their additional voluntary contributions, leading to adjustments of more than 2.1 million barrels per day, OPEC’s website states.

“This additional adjustment would be effective as of January 1, 2020 and is subject to full conformity by every country participating in the Declaration of Cooperation,” a statement posted on OPEC’s website reads.

OPEC’s next meeting will be held on March 5, with the next OPEC and non-OPEC Ministerial meeting held on March 6. A further OPEC meeting is scheduled for June 9 and an additional OPEC+ meeting is due to take place on June 10.

For highlights of the latest OPEC+ ministerial meetings, see below:

🎥Watch highlights of the just concluded Ministerial Meetings in Vienna 👇 pic.twitter.com/DhlS2xH6O6

— OPEC (@OPECSecretariat) December 9, 2019

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