2019: A pivotal year for OPEC
By Dr. Cyril Widdershoven – Berry Commodities – Global Head of Strategy & Risk
OPEC?s rollercoaster ride in Vienna highlights the growing divide within the oil cartel. Many oil analysts and financial gurus have fallen for the oldest media trick in the world, and a growing rift in the organization shows a new era is coming.
The so-called unexpected production cut, which was presented by OPEC?s media genius and Saudi Minister of Energy Khalid Al Falih, was not enough to curtail the current uncertainty in oil markets. After first indicating only a 800,000-1 million bpd production cut, which crashed prices straight away, Al Falih, in cooperation with his Russian colleague Novak, surprised the market 24 hours later by reporting a 1.2 million bpd production cut agreement. The reaction of the market, and all its specialists, was predictable. Crude oil prices jumped, reflecting a belief that stability had returned. Without even knowing the real facts of the agreement, oil market sentiment became immediately bullish. According to the statement by OPEC and its non-OPEC partners, the production cut will be based on October 2018 production levels, including some vague commitments of non-OPEC countries. Bullish sentiment seems to have returned, but several key factors remain unclear.