OPEC+ extends production cuts for the third time

Key takeaways:

– The prevailing sentiment before OPEC+ meeting in December was that the producers group would extend its production cuts, despite geopolitical tensions, given the current market fundamentals.

– OPEC+ continues to adopt a cautious approach as it assesses the outlook for demand particularly in China as well as geopolitics. The policies of the incoming Trump administration, especially regarding sanctions on Russia, Venezuela, and Iran, as well as its stance on tariffs, are of major significance.

– OPEC, and more recently OPEC+, has historically grappled with the challenge of ensuring member compliance with their assigned production quotas. This issue stems from the inherent difficulty in balancing the collective goals of stabilizing global oil markets with the individual economic interests of member countries.