On Wednesday night, ministers’ faces were solemn when they left a meeting of the Joint Ministerial Committee, the body tasked with overseeing an “agreement of cooperation” between OPEC and a group of allies — together known as OPEC+ — and which is led by the Saudi and Russian energy ministers.
The next day, OPEC did not reach an accord among themselves and broke without a deal for the first time in nearly five years. All eyes were then on Friday’s meeting of OPEC+. It went down to the wire.
The gathering took place against the backdrop of oil prices
Physical markets were taken aback by the US granting waivers on the Iran sanctions to the eight largest importers of Tehran’s crude. The Gulf OPEC members and Russia had pumped full throttle in anticipation of the sanctions, which came into force on Nov. 4. Iran exports had come down just shy of 1 million barrels per day (
Production from the US has also surprised on the upside, with the US becoming a net exporter of crude and products for the first time in seven decades. In other words, there is again a supply overhang in the market. At the same
The going was tough at this week’s OPEC meetings as several countries — including Iran — demanded exemptions from the cuts. The other question was where the baseline should be: November 2018, when most producers pumped at record levels, or an earlier date?
In the end, the meetings showed the art of the possible, with a sizeable 1.2 million
This outcome will give some temporary respite to the market, which rallied on the news of the deal on Friday. First and foremost it proves the importance of OPEC+ when it comes to the overall aim of balancing the markets. This makes sense in light of the newfound might of US oil production. It also proves that Russia has become a powerful voice at the table in the two years since OPEC+ was first formed.