Oil Price Targets Would Make a Far Better Goal - Bloomberg

Oil Price Targets Would Make a Far Better Goal - Bloomberg

If you can’t hit the target, bring it closer. That seems to be the policy adopted by the OPEC+ alliance of oil producers as they make the world’s biggest-ever output cuts in an attempt to shore up oil prices.

After a meeting in January, the group’s co-leader, Saudi Arabia’s oil minister, Prince Abdulaziz Bin Salman, announced that the producers were setting themselves a new target for their output cuts — restoring oil stockpiles in the developed countries of the Organisation for Economic Cooperation and Development to a new five-year average level.

They’re focusing on the OECD because its members report oil stockpiles in a (relatively) timely fashion — preliminary levels for the end of December were published by the International Energy Agency last week, although they will be revised for many months to come. Whereas other countries, like China, don’t publish oil stockpile levels at all.

OPEC+ was formed in 2016 to combat the soaring global oil stockpile that resulted from the second U.S. shale boom and the collapse in oil prices. Its members sought to bring the volume of oil stored in tanks, salt caverns, ships and pipelines down to its five-year average level, although they were never quite specific about which five-year measure they had in mind. It was meant to be a quick, six-month process starting in January 2017. More than four years on, their efforts are continuing, given new urgency by the Covid-19 pandemic.