Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
OPEC seems to be determined to do all they can to support crude
oil prices, with their production having dropped further in
December. There are still some members among the cartel not
respecting their quotas, with Saudi Arabia stepping in to
compensate for other producers. Crude oil shipments have remained
below 23 million b/d since July, as data shown by IHS Markit Commodities at
Sea.
Saudi Arabia has been overcomplying so that the cartel can
achieve the quota agreed. This, together with the collapse of Iran
after the US sanctions, has kept crude oil shipments of OPEC from
the Middle East close to 16 million b/d since early 2019. Iraq has
been marginally above quota, with Nigeria having been the other
country causing headaches to OPEC, even if they have recently moved
closer to compliance.
At OPEC+'s last meeting in early December, it was decided for
the current cuts to be deepened further by 500,000 b/d within the
first quarter of 2020. The cartel has been expecting global demand
to weaken in 2020. Meanwhile, uncertainty around the safety in the
Middle East Gulf caused panic earlier in January about potential
supply disruptions. With the US and Iran in a 'de-escalation mode'
since, at least for now, crude oil prices were pushed down yet
again to levels last seen in mid-December.
Time will tell what will follow after March 2020, with all eyes
on OPEC's partners participating in the production cut agreement,
primarily Russia. Once the current deal expires, these producers
will have to consider the fundamental outlook of the oil market,
with a surplus on the horizon. There is no doubt that the market
will remain nervous.
Posted 14 January 2020 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
