22 Nov 2019: What will OPEC decide to do in their December meeting?
In December, the Organization of the Petroleum Exporting Countries (OPEC) will gather in Vienna for their annual discussion on future levels of oil production and exports. Since 2016, these discussions include a group of 11 non-OPEC members. The group, informally called “OPEC+” includes Russia, Mexico, and Kazakhstan. The combined group has a significant market share: in October 2019 they produced almost 50% of global output. However, the increased size of the group and the diversity of interests and opinions has made decision making even more difficult. These challenges will need to be dealt with again next month when both OPEC (December 5) and OPEC+ (December 6) will meet. Since the start of 2019, OPEC+ has had an agreement in place where they agreed to cut output by 1.2 Mb/d. This agreement expires at the end of March 2020 and OPEC+ members need to decide their next steps: maintain current production levels, cut output further or relax the restrictions. What the delegates decide will have an immediate impact on oil prices. It will also affect the tanker market, which has been finely balanced in recent months and already faces significant uncertainty as a result of the implementation of IMO2020 on January 1st.
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