OPEC+ Cuts Close To or Better than Expected and Helping Support Oil Prices

OPEC+ supply cutbacks this year have “been close enough to expectations” according to Deutsche Bank while BofA see cuts “positive” compared with initial market expectations even if the group has yet to deliver full volumes.

• “It is going to be nearly impossible for OPEC+ to relax on production discipline for the foreseeable future, or even possibly in the long term,” said Michael Hsueh at Deutsche Bank.
• “That is because there is a significant list of new supply projects coming on stream, that may meet a good share of the slower pace of demand growth that seems likely by 2030,” he added.
• “OPEC+ is mostly responsible for stabilizing prices at $80, as they would be lower if they hadn’t cut so much,” said Francisco Blanch at BofA.
• “What OPEC has done isn’t nothing, and I would point to the breadth of the cuts — from Iraq, Kuwait and Algeria — showing they’re broader maybe than was expected.”
• The group has internal tensions but aren’t enough to cause a breakdown. If shale can grow with prices at $70/bbl, “then they’d have to re-adjust the strategy as you can’t lose market share forever,” Blanch added.