OPEC Deal Isn't Worth the Paper It's Written On - Bloomberg

OPEC Deal Isn't Worth the Paper It's Written On - Bloomberg:

There was an elephant in the room during the recent OPEC+ meeting: The record-breaking initial public offering of Saudi Arabia’s mammoth oil company Saudi Aramco occurring at exactly the same time.

The coincidence meant that the output cuts agreed by OPEC and its allies were designed as much to bolster the share price of Saudi Arabian Oil Co., as they were to balance the oil market going into 2020. This will greatly complicate matters for Saudi Arabia when it finds itself having to impose discipline on fellow producers looking for ways to adhere to their targets without actually cutting production. The deal is much weaker than it looks.

The headlines out of Vienna took markets by surprise. The group cut their collective output target by a further 500,000 barrels a day for the first quarter of 2020, taking the reduction from 2018 baselines to 1.7 million barrels a day. Saudi Arabia, the kingmaker in all oil matters, said it would reduce its own target by a further 400,000 barrels a day on top of that — as long as all the other participants adhered to their pledges.