The OPEC meeting came and went without much trouble. But even though market analysts and the media had assumed that there was a renewal of the current level of production cuts, OPEC surprised us all again.
Saudi Arabia had hinted before the meeting that the cartel was likely to overcome cuts when it pushed for a rethinking of its oil demand projections for the rest of the year, which it believed was too high. He also urged “caution” in this volatile market. This suggested that Saudi Arabia believed that oil demand was not as high as they had anticipated and therefore there may not be enough room for members to increase production.
But it was not so. In light of the global pressure exerted by the group (both the United States and India) to supply more crude to the market, the result may not be so surprising. Saudi Arabia denied that the pre-meeting phone call with Washington had anything to do with the outcome of the meeting, but we believe the media is discrediting the amount of influence that interaction had. To this end, Saudi Arabia did not object to a gradual increase in production during the OPEC meeting and noted that domestic demand would increase during the summer months and that an increase in production may be necessary. .
The OPEC meeting was quick on Thursday. Saudi Arabia began the meeting with a veiled threat that would decide on the fate of its own voluntary production …