OPEC+ Cheaters Start To Comply And What This Means For The Oil Market
OPEC+ Cheaters Start To Comply And What This Means For The Oil Market
When it comes to the oil market, it's best to not fight the Saudis. Speculators are currently winning as sentiment is close to peak bearishness just as global oil demand disappoint to the downside. But one of the key arguments from the bears seems to be centered around the possibility that OPEC+ is in a bind and the current production cuts are unsustainable. One data point the bears are using is the recent overproduction from the countries that are "cheating."
I'm here to tell you that they are starting to comply.
As we have been pointing out since June, something changed. What we previously believed to be a nonexistent OPEC+ production cut is finally starting to turn into one.
And looking at OPEC+ crude exports, September exports are going to be close to the June-August average.
Note: We expect this to get revised higher to match August levels.
I think there are important market implications arising from this. There are also historical analogs we can look at to gauge where the oil market is headed.