A little over a week ago I wrote that oil producers need a mechanism allowing them to respond quickly to changes in the oil market that could be both big and fast. I’m pleased to see that’s what they’ve tried to create, even if it isn’t quite what I had in mind.
My colleague Alaric Nightingale suggested the OPEC+ alliance should assemble a small SWAT team that could take swift, tactical action. Instead, it has decided to mobilize its entire army as the rapid-response unit.
It did so at the end of another week of fractious meetings, which concluded with a signature OPEC+ compromise that its 23 members could all sign on to. The group, which includes Saudi Arabia, Russia, Iraq and the United Arab Emirates, agreed to raise its collective output by 500,000 barrels a day from Jan. 1.
So far, so good. It wasn’t the three-month delay to raising output that markets had been expecting, but neither was it the imminent return of 1.9 million barrels a day envisaged under the deal struck in April. Then came the kicker: For the foreseeable future, the oil ministers will meet during the first week of each month to decide on subsequent action — all 23 of them. This after they’d only just shown us how unwieldy that can get. Let’s hope this doesn’t become a roadmap for these new monthly powwows.
Monday’s virtual gathering of the 13 OPEC ministers broke up without agreement, the bigger OPEC+ meeting was delayed by two days and then by another two hours as the start time approached. The intervening days and hours were used for a sort of virtual shuttle diplomacy to try to find a deal everyone could accept.
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