Global Economy and Energy Markets Weekly Commentary – 3rd Dec ‘20

Dr Nakhle comments on the recent wedge between Saudi Arabia and the UAE and the impact it has on OPEC Policy, explaining that OPEC has never really been about absolute consensus. The UAE is today standing out because, although it has long been a strong and loyal OPEC member, it is no longer comfortable to continue with the same understanding around divergent compliance. However, there is a certain group of countries within the organisation who focus on the long term longevity of the group and who are willing to subsidise those who are not able to meet their obligations. 

She also discusses whether OPEC+ members could really hold it together for another 16 months. OPEC has been through tougher times in terms of reaching agreement, according to Dr Nakhle. If their target is to maintain the last upward pressure that we saw on prices at the end of November, then it makes sense to rollover the cuts, but it wouldn’t be going to be for three months.

Dr Nakhle further talks about the prospect that the progress on vaccine changes the global economic forecasts, explaining that the vaccine has already been factored into the projections for next year by the various organisations. What the vaccine might do is to support a smaller fiscal stimulus package.