OPEC’s Revenge

As OPEC heads into its March 17-18th OPEC+ coalition “Joint Technical Committee and Joint Ministerial Monitoring Committee” meeting in Baku, Azerbaijan, they are making it clear that they are considering an extension of OPEC production cuts but also warning the U.S. not to think about instituting a NOPEC bill that would allow the government to sue the cartel. According to a Bloomberg report, they would start a production war, call on every member to raise production to maximum capacity, causing a crash in oil prices, and continue to work to bring the shale oil producers to their knees.

Yet without a bill, they plan on draining supply and driving the price of Brent oil basis back to $80 a barrel, tweet or no tweet. OPEC is still fuming about President Trump’s last-minute reversal on Iranian oil sanctions when he granted waivers, especially after OPEC and their partner in crime Russia, tried to appease the president by raising production. Now the gloves have come off and the cartel wants revenge and they are going to stay tighter and show that they will not be swayed by the U.S. President.

OPEC is covering their tracks and they are making a case for even further cuts by lowering their demand estimate for crude oil. In their latest report, they lowered their 2019 demand forecast to 30.46 million barrels per day, 130,000 bpd less than last month’s forecast. OPEC is also calling on others to cut output and they will not be swayed from their production cut goals, despite evidence that their determinization will lead to a supply deficit in the near future.

In fact, that is exactly what the International Energy Agency (IEA) is predicting. The world is being led by U.S. oil demand growth as we are the strongest economy on the globe. The IEA, according to Reuters, is saying that “The Paris-based IEA said the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 million bpd.”

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