The OPEC Meeting in Vienna is under way. Most analysts and commentators agree that the cuts will continue until the end of 2018. Current deal expires in March 2018. Their aim is to ensure that global oil reserves stay on downward trend meanwhile prices continue to rise. It seems that every member of OPEC with the biggest non-OPEC member Russia agrees.
“Everybody’s working toward that nine-month extension,” Nigerian Petroleum Minister Emmanuel Kachikwu said in a television interview with Bloomberg. Everybody including traders will be nervously waiting on the details of Thursday’s final agreement.
Here are four scenarios according to Bloomberg:
1. Extension of oil cuts until end of next year. This is the outcome Saudi Arabia most wants. Cuts will be going without review except in June 2018 when is scheduled next OPEC meeting.
2. Extension for three months with option to renew for a further six. Potentially the most bearish outcome, OPEC would try to assuage Russian concerns about overheating the oil market by leaving renewal of the production curbs for the June meeting, claims Bloomberg.
3. Probably the most bullish scenario for oil is a 12-month deal starting in January.
4. It’s possible that OPEC might roll over the cuts until the end of next year, but add some language on how the group will engineer a “soft landing” for the oil market once supply and demand are back in balance and inventories are drained to the five-year average targeted by OPEC.