Spencer Welch, Director, IHS Markit markets sheds more light on the latest OPEC agreement, discusses demand/supply mechanics before concluding something that is undeniable – OPEC’s grip on oil prices is loosening.
Key points
Price going to swing in $40-50 range, countries with high reserves would do well at low prices as opposed to countries with fragile reserves. Meanwhile, consumers would like prices to be low
Demand from China holding up well despite concerns of slowdown
Supply from Kashagan oil field unlikely to destabilize markets
Increased supplies from US and other non-OPEC producers pushed OPEC on the back foot
It would be difficult for OPEC to reach/respect an output cut deal… There is always a motivation for an individual member to produce a little more and out do other producers.