Oil Slides After Tuesday’s OPEC Meeting Rescheduled “As More Talks Needed”

On the first day of OPEC’s Vienna meeting, when nothing was achieved due to continued resistance from such oil producers as the UAE, Kazakhstan and Iraq, who refuse to extend production cuts, and when delegates leaked that a decision would likely be forthcoming after tomorrow’s OPEC+ meeting, moments ago oil slumped following a Bloomberg report that tomorrow’s meeting has been “rescheduled to Dec 3 as more talks are needed.” Oil and the energy complex promptly slumped following the report.

What to make of this? Well, nothing much as this is just outlier OPEC+ nations such as Kazakhstan and the UAE trying to stretch their muscles and pull a Mexico which managed to gain a modest production cut reprieve during the last OPEC+ negotiations. Of course, once you start on the rout of making exceptions for one member, you need to make exceptions for more (or all). Which likely means that while a production cut extension deal is guaranteed, it will again come at the expense of Saudi Arabia which will likel have to eat more of the deficit output, since OPEC’s minor members refuse to step up.

And since for Riyadh it makes far more sense to cut output modestly, than to watch as oil plunges from $48 back to $20 (or even lower), there should be no doubt that the outcome of the OPEC+ summit will ensure a continuation of the production status quo. The only question is how much will Saudi Arabia be on the hook for, and when will algos realize all of this, sending the price of oil sharply higher.