OPEC+ production cuts will not be enough

OPEC+ will need to stay 700,000 b/d below its agreed targets of 31.8 MMb/d through 2019 to bring a recovery in Brent prices to the $70 level, according to analyst Rystad Energy. On Dec. 7, 2018, the OPEC countries and Russia agreed to cut oil production by 1.2 MMb/d in 2019.

Head of oil market research Bjornar Tonhaugen said: “...The agreed production cuts will not be enough to ensure sustained and immediate recovery in oil prices…”

The analyst added that OPEC+ succeeds in preventing massive over-supply in the first half of 2019 and in putting a soft floor under oil prices for now. If production cuts by OPEC and Russia are extended through 2019, the market can balance.