OPEC member states convene to discuss increasing collective oil output
The OPEC+ bloc, including OPEC’s 15 members and 9 of its oil-producing allies, will discuss ramping up hydrocarbon output in Algiers today.
The influence of OPEC’s oil supply on global prices continues to grow with cooperation from other producers. Indeed, the OPEC+ “supercartel” controls 55% of the world oil market.
Since November, 2016, OPEC has strictly capped oil production, successfully raising prices from $30 per barrel to upwards of $70 per barrel. Overcompliance with the cap from a majority of the bloc, coupled with shortages in Venezuela and Iran, threatens to further spike prices. At the current pace, global demand will far outstrip supply, especially with increasing Iranian fallout from US sanctions.
Under US pressure to keep prices down, Saudi Arabia has substantially increased production. At Riyadh’s, and Washington’s, behest, the bloc is primed to hike production by as much as 1 million barrels per day—a 3% increase. It is also in the interest of OPEC’s profits to meet demand.
In any event, prices seem bound for a moderate decline as caps increase. Additionally, expect higher compliance rates with OPEC guidelines as the OPEC+ partnership strengthens ahead of December meetings to potentially institutionalise the expanded cartel.
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