Outcome of OPEC meeting: No change (or rather no agreement)
December 18, 2015
Who was cited:
Amidst some confusion in the media reports earlier, it appears that OPEC has decided to leave its output policy unchanged, with no change to official ceiling.
In fact, OPEC's communique makes no mention of any output ceiling or level at all; it appears that OPEC Ministers have just "agreed" to maintain current output levels.
The meeting on 4th December sounds messy, with indications that ther was little agreement.
Earlier reports that Saudi Arabia would propose a deal for an output cut of 1 mmb/d at some point in 2016 involving non-OPEC, or that the official output ceiling would be raised to 31. mmb/d, or that Indonesia would be included, seem to be unfounded.
It is possible that thepotential Saudi proposal, conditional on firm commitments by key non-OPEC countries to cut and Iran/Iraq to show restraint, was designed to put the ball in others' court: as it is, Russia, Iran and Iraq quickly made it clear that they are not prepared to cut/restrain output for the time being.
It appears that OPEC is essentially in limbo, until the Iran post-sanctions situation is clear (the exact timing of the lifting of sanctions on oil exports is still not known).
With OPEC output continuing at current levels or creeping up slightly further, we see the current surplus still persisting, particularly if the winter weather stays very mild.
We now think that prices could dip towards the mid-$30s, or possibly even lower.
Contents of FGE's Flash Alert "Outcome of OPEC meeting", published Friday 4th December 2015.
Further information on FGE's Short-Term Global Oil Service can be found online by clicking on the link below.