The Organization of Petroleum Exporting Countries (OPEC) and its allies like Russia are in a fix, as the current oil demand is not strong enough to warrant an end of the production cut agreement nor is bad enough to reinforce more output cuts, according to Goldman Sachs.
Key points (Source: Bloomberg)
Demand doubts make it difficult to set future production caps.
OPEC+ (OPEC and its allies) may agree to flexible rollover of the deal.
Combined with uncertainty over Iranian exports and growing U.S. shale output, it “becomes increasingly difficult to know what production levels will balance the market.”
It’s much easier to unify a position, when there is a supply disruption or a strong demand, then both Russia and Saudi Arabia want to grow production.
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