What’s OPEC Exit Strategy After Cuts?

OPEC may be celebrating an historic deal to extend supply cuts, but after the party, the organization will face a trio of questions it left unanswered.

Will the lucrative yet delicate relationship between Saudi Arabia and Russia survive the life of the agreement? Will surging U.S. shale output prove too much temptation for OPEC countries to stick to their own production promises? And, perhaps most perplexing: What does OPEC have planned long-term?

The deal to maintain the cut another nine months, hammered out this week in Vienna, could expire in March with a return to OPEC’s pump-at-will policy that prevailed between 2014 and 2016 and pushed prices below $30 a barrel. Or the organization could keep adjusting production.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.