OPEC Won’t Want to Return to 2015 When They Lost Control of the Market: RBC

OPEC will seek to maintain a united front and strict enforcement of their agreement, despite some signs of dissent, Helima Croft, RBC’s Capital Markets global head of commodity strategy said.

• “I don’t anticipate Saudi Arabia throwing in the towel and doing what they did in 2015 when they stopped supporting the price,” Croft said.
• The ongoing issue stems from Angola and Nigeria’s desire for higher production quotas. Their baselines were squeezed in June while underperforming.
• “OPEC have to address this issue before they can move on to the bigger issue of deeper cuts,” Croft said.
• While Croft expects an agreement with both Nigeria and Angola, appeasing the former will be a bigger priority due to its legacy in OPEC.
• Croft added that there is additional pressure on OPEC amid production growth from non-members such as the USA and Brazil, potentially forcing OPEC to taper production and counter non-OPEC growth.