Insight
OPEC agreement collapses and takes oil price with it
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Report summary
On 6 March 2020, the OPEC+ group failed to reach agreement to extend production restraint beyond the end of this month. The previous day OPEC agreed to a proposal calling for an additional 1.5 million b/d reduction in supply through at least Q2 2020. Russia rejected the plan and with that, the group dis-banded without an official statement. In response, on 8 March, the Saudis announced a steep $4 to $8 per barrel reduction in April’s Official Selling Prices (OSPs). These cuts are seen as the start of a price war and Brent has moved to $34 as other markets also fell on 9 March due to fears about the spread of the COVID-19 virus. Highlights of our initial market analysis include: • The effect of these events on short-term oil market fundamentals • A forecast for Brent in Q2 2020 based on our assumptions • How will US supply behave? • Assessment of global breakeven prices
Table of contents
- Effect on the oil market and fundamentals
- Demand won’t be spurred by low oil prices
- Russia opts out of OPEC proposal
- US Lower 48- crucial lever in global market
Tables and charts
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Global future resource cost curve
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